15 Professional Financial Tips For People Over 50
Once you turn 50, your financial needs and goals may change. You need to be aware and in control of your finances if you want to have a secure future. The good thing is that it is never too late to change your spending and saving habits and have a good grasp on your finances. Take a look at these 15 suggestions inspired by John Hancock that will hopefully help people over the age of 50 become more financially savvy. Start here, and you will be on a better monetary path!
Note: The content of this article is for informational purposes only and is not a substitute for professional advice. Always consult with a qualified professional for advice tailored to your individual circumstances.
Think About Your Retirement
Once you hit 50, retirement is right around the corner. You are finally getting close to being able to spend your time however you please! But how do you want to spend your retirement? Do you plan to travel, start a new hobby, or babysit your grandkids? Every retirement plan will look a little different, and each one will come with different financial needs. Picture how you want to spend your retirement and then start to plan for it financially.
Consider Healthcare Costs
Many people worry about healthcare costs, especially in the later years of life. You may start to have new health problems or medical expenses that you never had when you were younger. You need to prepare for these unexpected costs in addition to the generally rising cost of health care. Assess how much you will need each month and each year, and then make sure you budget for those expenses. You want to be able to afford the care that you may need!
Contribute More To Your Retirement
The IRS regulates how much you can put into retirement plans without paying taxes. The good news is that once you hit 50, the IRS will let you contribute more! There are new limits to how much you can save, and catch-up contributions are also allowed. If you are in a position to save more money for your retirement, you should take advantage of these increased regulations.
Assess Your 401k Plans
Most employers offer 401k savings plans. If you have had multiple employers over the years, you may have more than one savings plan. Take a look at all of your 401k plans and learn how to maximize each one. See if you can consolidate the plans and add them to your current account. If one 401k is doing exceptionally well, you should hold on to that one while consolidating the rest.
Consolidate Your Retirement Plans
By the age of 50, you might have a few different retirement investment accounts. It could be time to consider consolidating them to make accounting and planning a little bit easier. Meet with a financial advisor to see if they recommend combining certain accounts or moving money from one account to another. As long as you keep the money in a retirement account and do not transfer it to savings or make a withdrawal, you should be able to avoid fines and fees.
Asses Your Investments
It may be time to look into safer investment options. While you may have been more aggressive with your investments when you were younger, once you hit 50, you want to make sure you are not gambling all your money away. Having all of your retirement money in high-risk investments is no longer a good plan. You can keep some of your savings in higher-risk stocks with the hopes of high rewards, but most of your retirement money would be best in a low-risk account. You don’t want to lose everything when you are so close to retirement!
Plan Your Withdrawals
It is almost time to start making withdrawals on your retirement accounts! If you are like most retirees, you have been waiting for this moment for quite a while. It would help if you started to look at what each of your retirement plans require to allow you to make withdrawals. Some may require you to be a certain age, while others may limit how much you can withdraw. There are also IRS annual minimums you need to be aware of. Meet with a financial advisor or make a plan on your own on how and when to withdraw your money to stay on budget and have enough cash on hand to survive. Making these plans in your 50s, before you retire, will help set you up for an easy retirement!
Clear Your Debt
Once you are in your 50s, you should have a very clear plan for how to tackle your debt. If you still have car loans, a mortgage, or if you are paying your children’s student loans, you should try to tackle all of these debts throughout your 50s. Make it a goal to turn 60 debt-free! Then, you will be ready for retirement without having to worry about interest payments or lenders constantly calling you.
Keep Building Your Emergency Savings
Most people in their 50s have an emergency savings account. If you don’t have one yet, it is never too late to start saving! Continue to put aside money for emergencies. You want to have cash ready for unexpected bills or expenses. Just because you are 50 doesn’t mean emergencies go away! You should continue to prepare and grow your emergency fund, keeping you financially secure and ready for anything!
Learn About Social Security
Your 50s is the best time to start seriously planning your retirement. You will likely qualify for social security checks by the time you reach retirement age. The government will send you a set amount of money based on various factors. YOu can figure out exactly how much you will receive if you create an account on the Social Security website and enter your information. Use this number to help you budget and plan how much you will need in savings to retire comfortably.
Learn About Medicare
Medicare is another thing you should start to research and learn about while you are still in your 50s. Medicare will help pay for a lot of your medical expenses when you are in retirement, but you need to learn exactly what it will cover. If you learn about Medicare coverage now, you still have plenty of time to save and adjust your plan before retirement arrives.
Assess Your Lifestyle
Your 50s is a much different time than your 30s or 40s. When you were younger, you may have been raising a family, climbing the corporate ladder, or saving for major home purchases. Now that you are 50, you may no longer need that big house with six bedrooms, and you may be able to get away with just owning one car. Take a look at your lifestyle and how it has changed now that you are 50. You can make a few adjustments to your lifestyle to help you spend less and save more.
The 50-30-20 Rule
Have you ever heard of the 50-30-20 rule? It’s quite simple. Whenever you receive your salary, put 50% on the side. These are the money you will use for all scheduled and necessary expenses. An example? Your rent, groceries, fuel, and so on. The remaining 30% goes for everything you love. Dinner with friends, cinema tickets and so on. And the remaining 20%? That’s for savings!
Find Your Saving Method
There are so many different savings methods to try out. Not all of them will work for everybody. For instance, some people prefer to put a percentage of their salary aside when they receive the money. This method may not work for everyone as some people feel too limited by it. Others, for instance, prefer to simply add to their savings whatever they did not spend throughout the month on the side. Find the best method for your lifestyle!
Forecast Your Tax Payments
By estimating how much you’ll owe in taxes based on your income and deductions, you can plan ahead and set aside the right amount. This will help avoid some big surprises come tax season! Taking advantage of retirement account contributions or tax-advantaged savings plans can also help lower your taxable income and help you keep more of your earnings in the bank. The earlier you start planning, the more time you have to adjust your finances and maximize your savings for the future.
This article was inspired by John Hancock and originally published at WMN Lives.
