Fifty is the perfect time to start kicking your retirement savings into overdrive. Investing is a great way to make your money work for you. As you get older, risky investments become less appealing. In order to remain fiscally conservative while investing over 50, here are a few tips you should consider.
Set Goals
If you don’t already have financial goals for retirement, it’s time to start thinking about them. How much money will you need to live on? Talk to a professional and have them run some numbers for you. An experienced professional will be able to guide you through the entire process. Utilize their services to help get you on the right path for a successful retirement.
Prioritize Savings
At 50 years old, it’s time to start taking retirement seriously. This means you need to prioritize investing. If possible, increase the amount of money you’re setting aside for retirement each month. Sacrifice a little more now so you can take it easy later on in life. Every little bit helps so try to invest as much as you can.
Diversify
Diversifying your investment portfolio is important especially as you get closer to retirement. You’ve heard the phrase, “Don’t put all of your eggs in one basket”. Apply that to your investment strategy. Dayana Yachim, a writer for nerdwallet.com writes, “Within the stocks and bonds portions of your portfolio, your money should be further diversified across asset classes. For equities that means having exposure to large, small and mid-size companies, established and emerging international markets, and real estate. With bonds it’s allocating money in short-, mid- and long-term U.S. and international bonds.”
Roth IRA
One thing you can do each year to help save for retirement is to invest in a Roth IRA. It will provide you with some flexibility on how you can take money out should you need it. This type of investment will also make passing down your money easier tax-wise. You can max out your Roth each year at $7,000 if you’re 50 or older. Meet that goal first and then focus on other forms of investing.
Consider your Taxes
Don’t forget to include taxes into your budget for retirement. An article written by Ben Geier for smartasset.com explains this by saying, “Just because you’re retiring, the tax man doesn’t stop coming to your door. When you’re planning for your retirement, it’s important to think about what taxes you’ll need to pay. If you’ve saved for retirement using either a traditional 401(k) or a traditional IRA, you’ll be paying taxes on that money as it is dispersed to you in retirement. If you used a Roth 401(k) or Roth IRA, you already paid taxes on that money before it was invested, so you’ll be able to withdraw it tax-free in retirement.”
Even though retirement might seem far away, it’s important to start planning as soon as possible. Preparing now will give you the greatest chance at success.