Smart Money Moves to Make In Your 50’s

The big 5-0 is here!‍ Maybe you have been asking yourself what you should do with your money today in order to achieve the goals you have for retirement, for example, taking more trips, doing more volunteer work, and living more comfortably. It’s definitely something to think of as you start nearing your 60s (or earlier) as the average American usually retires at age 62. Here are some smart money moves to make in your 50s!

July 29, 2022
Smart Money Moves to Make In Your 50’s

Smart Money Moves to Make In Your 50’s

The big 5-0 is here! 

What are the benefits of reaching your fifties? Here are a few things: You are way more chilled at social and work events. You have a wider range of knowledge. Your taste in music is better than the current generation. Maybe the kids are off to college so no more drop-offs or getting too creative with the kiddie meals, there are loads of things, am I right? 

Maybe you have been asking yourself what you should do with your money today in order to achieve the goals you have for retirement, for example, taking more trips, doing more volunteer work, and living more comfortably. It’s definitely something to think of as you start nearing your 60s (or earlier) as the average American usually retires at age 62. So, it’s wise to start prepping for those financial investments in your 50s because failing to do so can result in stress and reduce your quality of life later on, which you want to avoid at all costs.  Making errors during this period of your life could result in irreparable financial losses that you could have avoided now. Again, don't leave your golden years to chance. 

Let’s dive in:

1. Consult with a Financial Advisor and Set a Date

How well-rounded is your retirement strategy? Have you got one? Do you have a plan for putting it into action? The benefits of having a written strategy "pays significant dividends." One of the most important, if you haven't done it already, is to consult with a financial advisor.

If you don't have a written plan, a certified financial planner can provide you with expert advice and help you prioritize your goals in a way that is best for you. A financial planner will see things that you do not and will offer objective, unbiased recommendations.  It is always beneficial to get a second set of expert eyes. And having a well-thought-out plan will give you a big psychological lift, and it would provide you with documentation that you can always use to track how close you are to retiring and if you are truly ready. You can even put several potential positive and negative outcomes before and after retirement to the test. It can provide immense value over time for you and your family.  In fact, Vanguard released a study stating that financial advisors will add 3% to your net returns.

Want to get started right away? Speak with an advisor now and let’s get an in-depth plan suited just for you.

2. Let Cost Savings Be Your Focus

It's official: You have a deadline for making investments for your retirement. At this point, neither time nor compounding's power is working in your favor. This means that your savings rate must account for the majority of your retirement resources. Start putting your focus on cost savings, for example: 

✔️ Create a Plan: Make a new budget and look for areas where you may cut back on particular categories of spending across the board. Use one of the many apps available — such as Simplifi by Quicken or if you prefer a Budget Spreadsheet to monitor your costs. If you don’t have an emergency fund, budget for one and get started today through a high-yield savings account. Online banks like Varo or CIT Bank offer some of the highest APYs.

✔️ Pay off Your Debt: It's time to pay off any outstanding unsecured debts, such as credit card balances, personal loans, or student loans. To pay off high-interest loans one at a time, employ the debt snowball method. You'll have extra money each month to put toward the following loan as you pay off each one. Make sure you don't accrue any further debt in the interim.  For example, if you don't, start making monthly full payments on your credit card balances. Paying double-digit interest on consumer borrowing just makes it impossible to efficiently accumulate wealth. As you work your final few years before retiring, you don't want to be dealing with mountains of debt. Find out how much debt you currently have, and start making more payments as soon as you can. This includes any long-standing personal loans, vehicle loans, mortgages, big credit card bills, and mortgages. Living without a mortgage is financially liberating, according to the majority of retirees who own their homes outright.

✔️ Tax savings: To maximize your tax savings, increase your savings and take advantage of increased catch-up payments to your tax-advantaged accounts. Make sure to utilize employer matching contributions as much as possible toward a retirement plan. No matter the age, every employee who has the option should take advantage of it since it is essentially free money. Invest as much of your budget as you can in tax-advantaged retirement accounts. Keep in mind that you are eligible for catch-up contributions beyond the age of 50, which are an additional $1,000 per year for IRAs and $6,000 per year for 401(k) or 403(b) accounts. You should include tax-sheltered accounts in your early retirement strategy even if you want to retire before age 591/2. 

Note: Now is the best time to have some significant conversations if you have to consider both your parents and your children. Establish your expectations regarding their financial duties if your children are in college or recent graduates starting off their careers. Establish financial boundaries to prevent your children's financial requirements from affecting your own retirement strategy. Make sure your parents have a sufficient aging plan in place to safeguard their assets and your future.

3. Long-term Care Insurance

Another important goal in your 50s is to look into long-term care insurance. This is a very common question among my clients. There are many ways to accomplish this that are not cost-prohibitive.  Many individuals think long-term care insurance is only for persons over 80. Approximately 40% of Americans getting long-term care benefits are in fact between the ages of 18 and 64. Buying long-term care at age 50 versus, say, age 75 is considerably easier when you're healthy and putting in your insurability. Long-term care insurance premiums can increase significantly if you wait to buy them. 

For example, a 50-year-old man purchasing a long-term care policy might pay a $3,302 yearly premium. However, delaying the purchase for ten years would result in an annual cost of $6,678, which is more than twice the rate for people over 50. A $17,760 annual premium would be incurred by delaying a purchase until age 70. If you think you cannot afford long-term care insurance then use your permanent life insurance's "living benefits" to your advantage. To create an annual retirement income stream, you can annuitize permanent life insurance using the cash value. You can also pay for your long-term care expenses up front by using the cash value or profits from your life insurance policy. Whatever your plan, make sure you have one, and make sure you have some extra money set aside in case you need it.

Note: Just like life insurance, long-term care coverage can vary significantly depending on your location, family history, and desired length of coverage.

4. Get Serious with Estate Planning

Have you prepared a will? Are all of your current assets included in it? Do you still desire the same method of money distribution? If you don't already have one, this is the ideal time to start. Once you get that done, go over any documents you have for medical planning, like a power of attorney or a living will, in case you become disabled, for example. You want to prepare for that now. If you've accumulated money, you might want to set up a trust to keep your assets growing, managed, and distributed to your heirs.

Don't be reluctant to seek the advice of an estate planning lawyer or speak with a financial advisor today.  While you're at it, ask them how to divide your assets to your heirs in a way that minimizes taxes so that you can take care of that as well. Make sure that all the i's are dotted, and T's crossed in regards to the estate plan.

5. Review Your Life Insurance Policy

Even those in excellent physical condition and with sufficient resources can find great value in purchasing a life insurance policy. Once you reach the age of 50, you might discover that your demands for life insurance are very different from what they were when you were younger. You may have paid off a sizable chunk of your bills and no longer need to support small children so there may be more wiggle room. That being said, examine your life insurance and disability insurance to ensure both are adequate for the remaining years of your working life. Here are some of the best life insurance companies for people over 50.

Note: You should also consider who might have access to these belongings while you are away from home and if you are storing them as securely as feasible.

6. Step on the Gas in Your Career

You're nearing the end zone of your career and it's important to maximize your savings for retirement as we mentioned above. It can also be an excellent time to consider beginning a business or a side gig. You may want to try your hand at something new if you want to, or you may have experience in your industry. You can gain from starting your own business in a number of ways. This opportunity gives you the chance to diversify your sources of income and create a long-term project. What's stopping you? Colonel Sanders started franchising his chicken company at the age of 65 with the help of his $105 monthly Social Security cheque. Currently, Kentucky Fried Chicken runs more than 5,200 locations in the US and more than 15,000 locations worldwide!

I also want to bring to your attention that it's crucial to stop for a moment and recognize your value, even if you have to make significant professional changes that you may not really want to undertake. You are valuable in and of yourself, independent of your work. 

There you have it! I hope this list was helpful! 

Don’t let this list overwhelm you. Our team at Vincere can guide you in developing a plan that is tailored to your individual needs in order to achieve your desired outcome.⁠ Let us get to work for you. Connect with us today and let’s get started on moving you into your dream home. ⁠Click here to set up a FREE 1:1 session.


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Your Money. Your Life.

Vincere helps you live your ideal lifestyle by providing financial planning and investment advice that helps you pursue your passion and achieve a "Work Optional" Lifestyle.