You’re probably juggling a hectic employment and family schedule with a lot of responsibilities while you’re in your 50s. Retirement may be the last thing on your mind after 10 to 15 years. Nonetheless, it is vital that you take the time to contemplate the following step before it passes you by.
It is true that establishing a retirement fund is critical. Smart planning is allowing yourself to fantasize about travel, volunteer work, a second career, or other things you’ve always wanted to do. You can visualize and plan for your perfect life with the assistance of financial planners, therapists, life coaches, or religious counselors.
The capacity to look at your conduct and create healthy habits today is the hidden weapon for a prosperous retirement. Ideally, you’ll be able to avoid making decisions that are tough to reverse. To live the life you want in the future, you must optimize your savings, investments, and debt removal today. Use the following checklist as you consider the next chapter and what has to be done right now.
#1. Establish an approximate retirement date with the help of a financial advisor
What are your long-term retirement goals? Do you have a plan for putting it into action? A retirement plan, in addition to providing you with a much-needed psychological boost, will allow you to track your progress toward retirement.
There are several trained financial planners available who can help you in prioritizing your financial goals. You may not be able to perceive things that a planner can if you don’t have a written plan. You can even simulate numerous excellent and terrible outcomes before and during retirement. The Financial Planning Association provides a list of certified financial planners (FPA).
#2. Set up your Social Security online and investigate other sources of income
The next step is to educate yourself on Social Security. SSA.gov has a number of calculators that will help you determine how much your monthly benefit will be after you retire. Each year that you worked and paid Social Security taxes, you will be able to see a list of your earnings.
The precision of these numbers will determine your financial success. Make certain that these figures are precise, as they will determine your financial advantage.
We recommend researching how other retirement income sources, such as a pension, may interact with Social Security. Things can get tricky when it comes to windfall provisions and government offsets. The Windfall Elimination Provision [WEP] and the Government Pension Offset [GPO] may reduce your Social Security retirement payments.
#3. Examine your spending to see if it corresponds to your projected revenue
To track your important and discretionary expenditures, we recommend utilizing an app like Simplifi by Quicken, You Need a Budget (YNAB), or Mint by Intuit.
Housing, transportation, and healthcare are all required, but the majority of other expenses are optional.
Gaining a clear view of your expenses is the first step in developing an investing and spending strategy.
As a general rule, this should be done a year or two before retirement.
Estimate the income you will receive in the future from various sources, such as pensions, Social Security, or part-time work. Calculate any potential disparity between your monthly living expenses and the income you expect from these sources.
#4. Increase your retirement savings while keeping track of your progress
Are you on track to meet your retirement savings?
As a general guideline, persons in their 50s should save four to six times their annual earnings, while those in their 55s should save up to eight times their annual salary.
If you’re in your 50s and have a combined gross income of $200,000, you’ll need between $800,000 and $1 million.
Figures like these are an excellent place to start. It is critical to collaborate with a professional.
Is there anything else you want to add? Then, take advantage of the catch-up provision in many retirement plans and contribute the maximum amount permitted.
Individuals over the age of 50 can contribute $1,000 more to their IRAs than the typical $6,000 contribution limit, or $6,500 more to their employer-sponsored retirement plans than the standard $19,500 contribution limit.
#5. Keep your emergency funds safe and aggressively pay down your debt
Reduce your discretionary spending and pay off your credit card debt to free up income for retirement savings.
Furthermore, it is critical that you pay off your retirement and any outstanding educational loans in order to have the least financial burden when you retire.
Don’t spend your emergency funds on items you don’t require, as this could risk your investments and financial strategy in the event of an economic downturn.
Make the best of what you have, even if it means selling items you no longer need or taking on a part-time job.
#6. Examine your insurance and legal documents
Are you adequately insured? Examine your life and disability insurance coverage to verify it is adequate for your retirement years. Make long-term care plans, whether you buy insurance or self-insure.
It’s also a good time to review and update your will, financial and medical powers of attorney, and other important documents.
At the same time, examine how securely you store these items and who might have access to them while you are away.
#7. Set boundaries with your children, and keep your parents in mind
Finally, have those difficult but necessary conversations with both children and parents.
Set clear expectations for your children’s financial obligations if they are in college or have recently graduated.
Set financial constraints to avoid risking your personal retirement plan for your children.
Assist your parents in developing an effective aging plan to safeguard their assets – and yours.