Your 50’s are a time to start buckling down and preparing for retirement. Make the most out of this 10 year span by making the following money moves.
Financial Trial Run
If you’re unsure whether or not you’ll be able to live off your retirement funds alone, do a dry run. Give yourself the allotted money you’d get from social security and your other retirement funds. See if you can make it work! An article written Marilyn Lewis for moneytalksnews.com further elaborates by saying, “You’ll save more by reducing spending. But there’s another reason to get a good grip on your outflow: Living on less gives you information about where your money goes and how much you truly will need in retirement. It’s a reality check for your planning.” For best results, do this for a few months in a row. This will let you know where you need to tighten up in terms of your budget.
Ramp up Savings
When you’re in your 50’s, you’re about 10-15 years away from retirement. It’s the perfect time to start ramping up your savings to prep for your future. Retirement funds work best when you give them ample time to accrue interest. This is hard to do in a shorter window of time. Put everything you can into savings and retirement funds.
Get on the Same Page
You will be most successful in your retirement planning when you make sure you and your partner are on the same page. If one person is focused on saving and the other isn’t, it’s a recipe for resentment. Take the time to set some shared financial goals that you can work towards. If you both want to retire, work together to make it a possibility.
Aggressively Pay Off Debt
There’s no better time than your 50’s to start aggressively paying off debt. The more you pay off now, the less you’ll have to worry about when you’re on a fixed income. If you have excessive debt when you’re retired, chances are you’ll have to continue working. While it’s not the end of the world to work after retirement, it’s nice to have the choice vs. being forced to work in order to pay bills.
Maxing out your 401k contributions is a great place to start when it comes to retirement savings. However, that can’t be the only strategy you have. Have you ever heard the term ‘don’t put all of your eggs in one basket’? Contributing only to a 401k is like that. Continue investing in a variety of stocks and bonds. Diversify your portfolio as much as possible. This is the best way to protect your money. If one investment tanks, you have multiple other avenues of income to keep you comfortable.
Your 50’s can be considered ‘crunch time’ in terms of preparing for retirement. Focus on making these money moves to ensure you’re setting yourself up for future success.