A few months ago I wrote a blog post about the 83 most important financial tasks to make before you turn 30 years old to ensure that you have a great retirement. There are many key financial tasks that you need to make sure that you are doing to make certain that you will have a great set of Golden Years. But, many of our more mature readers asked about moves they should be making, and I did not want to leave them out.
While it is never too late for anyone who has not completed the 83 financial tasks in their thirties, there is no time to lose. If you are past that bench mark, there is no time to lose! If you are 50 years old or older, you probably only have ten to fifteen years left until retirement. Your focus needs to be considerably different than an investor in their twenties or thirties. It is not too late. It is never too late. But, the time is now! These are the moves you need to make or should have already made by your 50’s to be on track to a great retirement.
50 Moves to Make in Your 50’s…
- Make catch up contributions to your IRA and/or 401-k retirement plans, an extra $1,000 in catch up contributions to your Roth IRA and extra $5,500 to your 401-k
- Continue to max out your Roth IRA if you are eligible for one
- Consider rolling over your traditional IRA this year into a Roth IRA
- Reassess your asset allocations and rebalance your portfolio to ensure that you do not have too much risk as you near retirement
- Continue to shift your investments away from riskier investments like stocks into safer investments such as bonds
- Continue investing in index funds and no load mutual funds in some capacity. Do not just stop totally investing in stocks and mutual funds during your Golden Years
- Continue investing using dollar cost averaging
- Do not have too much of your nest egg invested in your company’s stock. Diversify. Many experts recommend keeping no more than 10% of your total investment portfolio in your company’s stock.
- Pay yourself first with your investments. Now is not the time to stop or slow down investing. Your 50’s are the time to ramp them up.
- Pay off your credit cards and other consumer debt if you have not already
- Pay off your HELOC mortgage and do not take out another one so late in life unless it is absolutely necessary.
- Pay off your home mortgage and other mortgages. Having your home free and clear can free up a lot of new disposable income, reduce the income you need in retirement, and may lower your life insurance need as well.
- Re-evaluate your life insurance needs after major life changes in your 50’s such as paying off your mortgage. You may find that you need far less.
- Be very careful and skeptical when considering reverse mortgages
- Consider alternate income streams like rental property, dividends, etc. to support you in retirement
- Check your credit report every year to protect yourself from identity theft
- Don’t buy gold from late night television. You do not need gold or other exotic investments in order to be diversified in your investments no matter how much it rises in the short term.
- Continue taking a brown bag lunch to work and skip going out to eat
- Consider starting a second career or starting your own small business
- Switch jobs if you are not happy. Life is too short not to be working in a job or career that you are absolutely passionate about.
- Do not let loyalty to a job, a boss, or an organization get in the way of a greater earning potential. There is no reward for job loyalty anymore.
- Consider working a few years longer and delaying retirement
- Consider waiting until 65 years old to draw your Social Security benefits
- Continue learning and earning credentials, certifications, etc.
- Do not cash out a Roth IRA before you are 59 ½ years old
- Do not take a 401-k loan unless you absolutely have no other choice
- Have a will and make sure that it is up-to-date with the correct beneficiaries
- Ensure that you have a healthcare proxy and living will and discuss your wishes with your family members
- Price long term care insurance by the your 60th birthday before rates skyrocket out of control
- Talk with your parents about their elderly care and funeral wishes. Talking about it now will help ease the pain at end of life or hospitalization happen. And, remember to do the same for your children.
- Carefully weigh the pros and cons of annuities before investing in them since they can have high fees, but annuities may offer great retirement income diversification.
- Seek professional advice from a fee only Certified Financial Planner (CFP) to help you crunch the numbers if you think that you can retire early
- Consider hiring an accountant or other tax professionals if your tax bills are getting too complicated for you to do them yourself.
- Continue to set financial goals for yourself and revisit them often
- Rekindle relationships with your friends so you have people to do things with during retirement
- Drive your car into the ground while saving to buy a new one with cash
- Limit the amount of support that you give your grown children
- Have three to six months of expenses in an emergency fund
- Consider having more than three to six months of expenses in an emergency fund especially if you have medical bills or other rainy day expenses coming up in your life.
- Buy generic medication when it is available to you and ask your doctor to prescribe only generics when he can
- Do not get needless medical tests done…especially if a portion of their cost will come out of your own pocket.
- Do not hesitate to get a second opinion with respect to your medical diagnosis or financial plan as well
- Practice being frugal wherever and whenever you can
- Do not beat yourself up about your financial mistakes that you make. Learn from them, strive not to repeat them, and move on.
- Continue teaching your children about money and investing even when they are grown. Always be there for them for advice when they seek it and keep the communication lines open to them.
- Guard against getting a divorce so late in life. A 50% loss in assets and a pension would be devastating so late in life with little time to make up for the losses in the market.
- Minimize your tax liability, and study tax structure carefully. You may want to consider moving to a tax friendly state that treats retirement income in a better light than ordinary income.
- Stay informed in political matters. You may want to consider joining associations and organizations that have your age group’s best interests at heart such as AARP, etc. There is legislation every year that is passed that greatly affects the wallets of retirees and those almost ready to retire.
- Learn how to harness the power of Twitter, LinkedIn, and Facebook to boost your networks, rekindle old friendships, and position yourselves for new jobs or careers.
- Embrace new technologies and continue following and reading blogs to learn the latest news, tips, and information
Your 50’s are not the time of your life to lose sight of the end. Retirement is in your grasp. You are almost there, and the choices that you make during your 50’s will continue to set you up for success or will trip you up in retirement. With the end so close, you cannot afford to make a mistake during this critical decade of your life. Did I get them all? Which tips do you think missed the mark? Which ones should have been in the list. Please leave a comment…
Also check out the great book… “ The Everything Personal Finance In Your 40’s and 50’s Book” by Jennifer and Bill Lane!
What is your favorite personal finance tip in your 50’s?
{ 18 comments }
Once all debt is paid off and plans are to pay cash in the future it is a good idea to freeze credit bureau accounts. The fee is different in each state, but usually free for those over 65. We froze our accounts several years ago….. It’s good to know that no one can establish credit in our names… we can’t even establish credit in our own names. We do have passwords for each credit bureau. These are never transmitted on the internet.
Never stop learning – whether it’s an elderhostel trip, a master gardener certification, or a Wii session with your grandkids – your brain cells need exercise as much as your muscles do.
AARP does not always have your interests in mind. First and foremost, they are a for profit insurance company. That’s why they sold out their “members” on the healthcare issues.
MOAA is a good organization for retired military members.
Live within your means.
AARP is part of the progressive movement for big government. They sided with the left againts allowing a small amount individual ownership of SS. I was a member for a few years, then realized they always sided against me and my country.
@Peter – before freezing your credit (it’s a royal PITA to unfreeze it later), make sure you have a credit card from your credit union, then close all the other ones. All of them. Don’t be frightened by people who tell you you’ll take a FICO hit by doing this. The new card you’ll be getting from your credit union will probably have a better (fixed, or no deal) rate and fewer fees and soak-the-customer traps than the ones you’re closing. If you don’t belong to a credit union, join one and move all your money and direct deposits there. You’ll be glad you did.
@Peter – privatization of Social Security, partial or otherwise, takes the “security” out of it. Sure, you probably think you can do a better job investing that money than the government, but what if you’re wrong. Worse, what if the bottom falls out of the market unexpectedly and you’re left holding a bag full of ashes. Do you really want to be passing out carts at Wal-Mart when you’re 75 because your investments went poof? So let the government invest your Social Security money in low-risk government bonds, and save the gambling for your 401K. You’ll sleep better.
While we’re on the subject, the AARP also enthusiastically endorsed that idiotic, outrageously expensive, and useless (to anyone who really needs it) Medicare prescription drug plan with the donut hole the Democrats just voted to close. So there’s plenty about AARP for everyone to be irked at, regardless of your political persuasion.
Democrats to @Peter – you’re welcome.
Great list to live by. I just wish you had the right abbreviation for the fifties: ’50s. Thanks!
It’s ’50s for the 1950s, but 50s for that certain time in your middle-aged life. OP has it correct.
Steaming….. what social security money is invested in safe government bonds? All the SS dollars collected have been spent. There is no money in your SS account, it’s just a bag full of IOUs signed by a bunch tax cheats and crooks that run our government. An individual could have invested in those same safe government bonds…. and they would have owned that money. They could have passed it on to their heirs. Intergenerational wealth building has worked for many families in the past and could work again. Bush’s SS solution would have reduced government control. We have less freedom as government grows. SS needs fixing, who will fix it? when? It has been announced that we got to insolvency quicker than we thought. The government will collect less in SS taxes than it pays out this year… oops. Sounds secure to me, NOT.
By the way George Bush was a big gov guy, just not as big gov as others. He’s no favorite of mine.
@ Peter – You make a great point about freezing your credit.
@ RazzBari – Never stop learning is by far a tip that is near and dear to my heart (#24 on the list). I am a continuous student…always taking classes, etc.
@ arby – I had not thought about AARP like that. They may have an insurance subsidiary, but they are a voice in Washington for retired people. And, you are right…MOAA is a great organization.
@ Steaming – I am not a big fan of Social Security, public or private. I don’t think that it is going to be there when we need it or when our children need it. And, it definitely will not be much more than lunch money if it is available. It will not be income replacement. That is for sure. That doesn’t sound like much “security” to me.
@ ed3206 & @ Steaming – I actually had no idea. Thanks for pointing that out. I have fixed it now. See…learned something new every day….goes back to my favorite tip.
Thanks everyone for all the comments and discussion. Keep’em coming!
Here’s one:
Travel tends to become a bigger priority to people at midlife and beyond. But be very careful about signing up for travel clubs, timeshares and timeshare resales, buying travel insurance from travel agents versus on your own — especially if any of these things involve contracts. I am a consumer writer and can’t tell you how many basically smart people I have seen lose thousands of dollars on these things.
As a baby boomer in my 50s, the most important tip is to pay off all debt (including mortgage). It’s important to enter retirement debt-free.
I always pay off my credit card each month in full, but this isn’t just a 50’s thing. No one should carry a balance. But I make the credit card work for me. I don’t pay a yearly fee and I get rewards. So the credit card is paying me to use it. I have purchased two laptops, a table saw, tons of books, video games etc with my reward certificates. And they didn’t cost me one cent. I am now almost to a DSLR camera. Can’t beat really free, can you?
It has been pointed out to me before that Social Security was never intended to be a stand-alone pension system. I think my annual statement said if I wanted to retire at 62, my monthly check would run around $1400. Waiting until later boosts that, but it’s still insufficient by itself. Any financial advisor worth his commission will tell you that.
I suppose if you eat nothing but beans and rice, it might be theoretically possible to live on SS alone, but it would suck. A better attitude toward SS is that it is more “part of this complete breakfast,” where the other components are any company pensions you might have been fortunate enough to get and private savings (like your 401k). Of those, Social Security is probably the most stable leg of that three-legged stool for most people.
What a great resource!
I am actually surprised at #5. Bonds have little to no growth at this time and the market is still viable if you are watching it. I think mutual funds are a rip off (and I have lived that rip off in two different recessions).
We plan on SS – but do not count on it. Our house is paid off- highly invested in strong companies with actual assets (no banks in our portfolio) and my dh has a good pension. I think having the “envelope system” for big ticket items (car, travel, house repair, presents…) is a good idea. Hard to come up with $17,000 in a blink if you don’t have the money saved for a new Honda or $8000 for a furnace. I certainly have no intention of going into debt at 53 with my hubby at 59.
Nice article- glad I lurked over here!
@Jan – I couldn’t disagree with you more. Bonds offer a safe alternative to stocks and mutual funds later in life. Bonds have been shown to be inversely related to stocks. So, when equities are moving down, bond rates move higher and vise versa offering great diversification. Good growth stock mutual funds from reputable fund companies are not a rip off. They should be the cornerstone with index funds of most investment portfolios. Picking an ethical parent company and a fund manager with a very long track record of success is the key to owning great mutual funds.
BOOK GIVEAWAY!! Thanks everyone for making this one of the best articles on Own The Dollar to date. I’ll leave the comments open, but I wanted to congratulate Jan Scholl on winning the book giveaway, a free copy of ” The Everything Personal Finance In Your 40’s and 50’s Book” by Jennifer and Bill Lane!
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