How to Plan Your Retirement Before You Hit 50

By on February 17, 2022
your retirement

The retirement age in the United States is 66. While you haven’t reached that number yet, you must think about how you are going to spend the rest of your life as you retire. In addition to finding a place where you can settle down, you will also need to learn how you can finance your retirement so you can live comfortably. 

If you want to make the most out of your retirement, it’s best to come up with a clear plan so you won’t have to stress what to do and where to go once you have reached 50.  The sooner you get started planning, the easier it would be to transition into retirement. Here are a few key tips to remember:

  1. Set specific goals

Your decisions will cost time and money, so it matters a lot to come up with a concrete set of goals. Perhaps you would like to move to Florida or start a real estate investment portfolio. Whatever your goals, it’s important to make sure they are attainable and won’t cause you to waste your time and money.

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  1. Determine your retirement needs

After you have set your retirement, you can then check how much money you will have to spend to sustain your lifestyle. As a general rule, you should save at least 70% to 90% of your annual pre-retirement income. This doesn’t apply to all retirees with unique needs. You will need to consider the kind of lifestyle you want to lead and come up with a workable amount. Whether you are planning to downsize or live luxuriously, estimating your finances can help set you up for your goals. 

  1. Pick a location you can afford

If aging in place isn’t on your retirement checklist, you might as well look for a great place that fits your lifestyle and budget. You can follow what other retirees are doing and travel south, but your choice of location should always depend on your personal preferences and the level of care you require as you age. Apart from purchasing a home, you can also look for senior living resources and pick the right living arrangement that supports your needs as you grow older.

  1. Settle all your debts

Retiring peacefully also means not having financial obligations anymore. By the time you turned 50, you should have cleared your mortgage and settled any loans. Once you have tackled all your debts, you will be able to add more money to your retirement savings. You can use this extra cash to buy your dream home or retire as an expatriate in another country. 

  1. Start a passive income investment

Your retirement savings won’t be enough to finance your lifestyle. After all, you also need to prepare for medical emergencies and other situations that could drain whatever cash you have left in the bank. For this reason, consider looking for an investment vehicle that can generate passive income. Looking beyond stocks, you can also opt to use your self-directed IRA or Roth IRA to purchase apartment buildings and other properties that can provide you with a steady cash flow that can be a good source for emergency funds. 

  1. Prepare what you want to leave behind

Once you have started planning your retirement, you will need to know what your loved ones will inherit. It seems too early to think about estate planning, but if one of your goals is to leave a lasting legacy to the next generation, then it helps to identify your beneficiaries and determine the assets you want them to inherit. Keep in mind that your beneficiaries will have to pay taxes when your assets are turned over to them. Make sure to consult a probate lawyer and learn how you can divide your assets among your loved ones. 

When it comes to retiring, it’s best that you start early so that you will have less to worry about as you enter the next phase of your life.

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How to Plan Your Retirement Before You Hit 50