6 Tips for Retirement Planning After 50

By on March 25, 2019
Retirement planning

In your 50s and beyond, you’re inching closer and closer to retirement age. You can start receiving some retirement benefits once you hit 62, and many people retire then or within a few years afterward.

No matter where you are in saving and how much you’ve put away, there is always room to improve your planning to be able to afford living the retirement lifestyle you want. The earlier you can start preparing, the better.

1. Visualize Your Retirement

Think about what you truly want your retirement to look like.

Write down your goals so that you can create a plan to get there. When you have an idea of what you want to do in retirement, you can make a retirement budget or use a retirement calculator to learn how much you’ll need to save.

If you haven’t worked with a financial advisor, it might help to get ideas on how to evolve your spending and savings. The Employee Benefits Research Institute 2018 Retirement Confidence Survey found those who work with a financial advisor are more likely to be satisfied with their retirement plan overall.

2. Set Up a Trust

As you approach retirement, you may also be thinking about leaving a legacy behind. Or, you may want to have money set aside to help family members should you pass on.

One way to distance yourself and future recipients from the wealth you want to be distributed is to set up a trust. A trust protects your assets so that they are only distributed to the people you want them to be, at the time you want them to be.

You can put aside a portion of your savings into a trust now, or distribute extra earnings (like a tax refund) directly into a trust. You might wonder, “Can you sell a term life insurance policy?” if you feel like you no longer need it. The answer is yes, in many cases. It is called a life settlement, and companies like Coventry Direct can explain the process and see whether you qualify to sell your policy. If you sell your life insurance policy, you can use those proceeds to fund a trust.

Considering a trust fund is an important part of the retirement process because it forces you to consider your future and your legacy. You can mandate in an irrevocable trust that funds can only be distributed to specific beneficiaries, so if you’re tempted to pull money out, you won’t be able to.

3. Increase Retirement Savings Contributions

If you’ve reached your 50s and have less saved for retirement than you’d like, the good news is that the federal government gives special “catch-up” contribution opportunities to workers 50 and older. While there are maximum contribution amounts to 401(k) accounts and individual retirement accounts (IRA), workers ages 50 and older can put more in than younger workers.

In 2019, workers 50 and older can save up to $25,000 in a 401(k) and up to $7,000 in an IRA. Try to max out your contributions so that you can also increase the dividends you get from those accounts.

And, if you are receiving new income, resist the urge to spend it. Put it into retirement savings, instead. For example, if all of your kids have left the nest and you are spending less now than you were when they were at home, put the difference in savings into your 401(k) or IRA. Or, use it to pay off debt.

4. Pay Off Debt

Speaking of paying off debt, once you retire, you want to have as little debt as possible — none is ideal. You don’t want to have to keep on paying interest on expenses like a home loan or credit card debt.

Pay off debt by reducing expenses and saving more. You might want to consider moving to a smaller home to save on upkeep and home loan payments if you no longer need all the space you have. If you have a fancy car, consider trading it in for a less-expensive model.

Take a detailed look at your expenses over the past three months. Identify unnecessary ones you can eliminate, like going to restaurants several nights a week, or paying for a cable subscription you don’t need. Put what you’re saving into paying off debts so you don’t have to worry about them when you’re retired.

5. Get Your Health in Order

Healthcare is one of the most significant costs for retirees. The healthier you are, the more you may be able to save on medical costs. Don’t smoke, exercise regularly, limit alcohol consumption, make healthy food choices, and get regular healthcare screenings for preventative care.

Make healthcare savings one of your retirement priorities. Invest in a health savings account if possible, since you can save pretax dollars that can be withdrawn tax-free if they’re used for qualified medical expenses. You can contribute up to $3,500 in a self-only HSA and $7,000 in a family HSA in 2019. Those ages 55 or older can contribute an extra $1,000.

Also, make sure you have comprehensive health insurance. You can’t enroll in Medicare until age 62, so you’ll want to ensure you have coverage for accidents and any health issues that pop up.

6. Secure Your Income

As you work toward saving for retirement, it’s important to retain any income you have coming in. Keep learning so that you can protect your job. Take up any continued learning opportunities your employer offers. Attend conferences.

Master technology that helps you work better in your position. Always stay on top of trends in your industry so that you remain a competitive employee.

If you’re tempted to retire early, consider this: Social Security benefits are based on your highest 35 years of earning. Working longer means you can earn more for retirement, and you may not be able to take out Social Security benefits until you’re 67, anyway. If you’re making a high wage now, it might be best to work in that position as long as you’re able to.

If you’ve always been interested in starting a side business or freelancing part-time, it could also be beneficial to start doing so before you’ve retired from a full-time position. You can put extra money you earn from a side gig into a retirement account or to pay off debt. You’ll have a new trade you can continue once you’re officially retired, and you have a backup source of income in case you lose your main position.

Wherever You Are, You Can Start Planning for Retirement Now

Your financial situation and lifestyle are unique. Wherever you are, you can take steps like these to ensure you create a healthy financial future for you and your loved ones.

 

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6 Tips for Retirement Planning After 50