Retirement Planning in Your 50s
It's Time to Get Serious About Your Retirement Planning
Retirement seems way out there on a distant horizon when you're in your forties, but that horizon begins inching must closer when you reach your fifties. Many people get serious about planning for their retirement now. It's time to take a thorough look at your future and make some decisions. Lay out a roadmap for your retirement years with these six steps.
Run Projections Using Retirement Calculators
If you haven’t done any type of retirement projections yet, start playing around with online retirement calculators. They can help you figure out how much income you might have in retirement given your current amount of savings and your investments.
But here's a word of warning: Although free online calculators can give you a broad overview of the relevant components of your retirement plan, they're based on assumptions. You know the old saying—garbage in, garbage out. Most online retirement calculators do not accurately factor in taxes. This can make a big difference in the results. You might want to enlist the help of a competent retirement planner to assist you in nailing down a more detailed projection.
Get a Handle on Spending
Nobody likes to hear it, but the fastest way to save more is to spend less. Trimming your lifestyle to one that costs a little less will allow you to save more now, and it will cost you less to maintain your standard of living in retirement. You can get a good handle on your spending habits by completing a retirement budget worksheet.
And don't overlook health insurance costs when you're budgeting. Take a close look at your estimated healthcare costs in retirement before you make any permanent plans, particularly if you plan on retiring before you reach Medicare age. They can be much more costly than you might expect.
You're more likely to achieve your retirement goals when you understand all the options that are available to you. Read books, subscribe to finance magazines, and attend classes to start learning about ways to invest in a smarter way and save more. You’ll also want to get a heads-up on the rules about retirement accounts and how they change as you reach specific ages.
The caveat? Online content, books, and classes are all great resources but it can still be difficult to determine which advice applies best to your personal situation. Again, professional help from a retirement planner or specialist can help guide your decisions.
Focus on Your Career
Finding work you enjoy might be the perfect solution. You might want to stay in the workforce longer if you enjoy what you're doing. For most people, earning power is one of the greatest assets they have.
Don’t be too quick to let it go. Look for ways you can earn extra money through enjoyable hobbies and skills if you're not the career type and really don't want to punch a time clock any longer.
If you're determined to stop working in your fifties, keep in mind you'll have to plan for a longer retirement timeframe. You might need funds to last you 35 to 40 years rather than 20 or 30. You'll have to save a lot more.
Invest and Save, Don’t Speculate
You have to be able to count on your retirement money being there for you, so now isn't the time to speculate. Learn what it means to build a portfolio, then do it. Build one that's appropriate for your goals. Don't rely on "investment experts" who make unrealistic promises.
And remember that there's no such thing as a free lunch or a perfect investment. Nothing offers absolute safety with no risk. Even with so-called "safe" investments, you run the risk that your rate of return will be less than inflation and you'll lose purchasing power over time. Your best option is to create a mix of investments with different levels of investment risk.
Review Your Plan Regularly
The more often you look at your finances, the more likely you are to make progress. Consider working your way through a retirement planning checklist. After you’ve gotten all the way through the list, begin conducting annual reviews by starting at the top and working your way back down again, updating as you go along.