Financial Planning in Your 50s - Adviser Investments

Financial Planning in Your 50s

December 13, 2019

Maybe it’s the responsibilities of raising a family and building a career, but many people don’t start taking financial planning seriously until their 50s, when they first see the retirement horizon approaching. If you are in your 50s, here are five tips to make sure that you’re preparing properly for that next big financial milestone. (If you’re not in your 50s, check out our previous entries on tips for your 20s, your 30s and your 40s, and stay tuned for a focus on planning in your 60s in the weeks ahead.)

  1. Understand Your Spending. Most everyone can quickly tell you how much they earn. Fewer people have a handle on what they’re spending. Knowing what it takes to maintain your lifestyle informs the rest of your financial plan. We’ve found that how a client spends is one of the most important factors in determining whether they will succeed or fail in reaching their retirement objectives. As a first step, take a look at our Budget Worksheet to get a handle on your monthly cash flow.
  2. Continue Investing for the Long Haul. It’s tempting to think about making your portfolio more conservative as your 60s start coming into view, but keep in mind that you will likely need your nest egg to last you another 20 to 30 years even after you hit 60. While there’s no need to take wild risks and everyone’s risk comfort zone is different, growing your portfolio faster than inflation—which has historically required a significant investment in stocks—should still be your primary goal.
  3. Play Catch-Up. Turning 50 means you’re eligible to make catch-up contributions to your retirement accounts. If you turned 50 this calendar year, you can contribute up to $25,000 to your 401(k)—the $19,000 standard limit plus a catch-up contribution of up to $6,000—for 2019. Those eligible to make catch-up contributions in 2020 can contribute up to $26,000 to a 401(k). Additionally, you can make catch-up contributions of $1,000 each to your HSAs and IRAs (and remember, you have until April 15, 2020 to make those HSA and IRA contributions for 2019).
  4. Consider Long-Term Care. It isn’t pleasant to think about, but the reality is that half of people turning 65 today will require long-term care. If you’d feel better having long-term care insurance, the best time to purchase a policy is typically in one’s late 50s, before premiums begin shooting higher.
  5. What’s Your Retirement Vision? Now’s a good time to start reflecting on what retirement means to you. For some it may be moving to warm climes while others may view retirement as an opportunity to work part-time or volunteer. Don’t forget to include your spouse, partner or other loved ones in your planning.

These five tips apply to most anyone in their 50s. But it’s also important to recognize that your situation is unique—that’s why we like to say that a good, customized financial plan is priceless, hence we offer precisely that to our clients at no extra cost. If you would like our help to make sure you or a loved one have checked the right boxes on a financial plan, please contact your portfolio team. We’ve got your back.


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