Retirement Planning Guide Based on Age: What to Do During your 50s


With 10 to 15 years more before you enter retirement, your 50s is the time to further grow your nest-egg and know for certain if you’re on the right track. At this point, you need to be wiser about spending, buy necessary risk management tools, and assess your strategy to know how much you’ll have in retirement and whether it’s enough or not.

If you’re a fifty-something and planning for retirement, here’s a guide on what you need to focus on at this point.

Setting Limits

retirement planning for 50 year-oldsMajority of middle-aged Americans are living in what they call the sandwich generation. This group is said to be in the middle of providing support to aging parents and adult children. Though providing assistance to loved ones is usually done out of concern, it can have financial drawbacks especially when it comes to retirement saving.

As parents, it’s normal to want the best for your children and even if they’re grown-ups, you still have their best interest at heart. However, you need to let them stand on their own at one point and start thinking about your future too.

Experts advise setting a limit on how much and how long you’re going to provide assistance to your children who are 18 and above. The most common expense that parents help their grown children with is college education. There’s always a loan for tuition fees, and you can help them pay it back in the future if you’re able. But as mentioned in the previous installment of this retirement planning series, there’s no scholarship, grant, or loan for retirement. You have to save and plan for it on your own.

Coverage for children who are insured under your policy usually lasts, by default, until your child reaches his or her 23rd or 25th birthday. Don’t plan on extending their coverage beyond that. They can always purchase their own coverage when they begin earning through a job. They can also use their college loan to get insured under the university if they’re still studying.

Meanwhile, if a child experiences a job loss and decided to move back with you, you need to set a limit on how much you can provide. Of course, you would gladly take them in, but the thing is, having an extra person in the home means needing a bigger budget. In some cases, parents ask their children some amount as rent money or to help with household expenses while they’re staying with them.

Providing assistance to older parents can also hinder fifty-somethings from focusing on their retirement planning. Talk to your parents about their finances early on. This will help you determine if they will need financial help and if so, by what extent. Based on this assessment, you can look at your own finances and see how much you can give without compromising your own financial health. If your parents will still likely need more help than what you can provide, talk to the other members of the family, see what they can offer, and come up with a solution. Consulting with a professional can also help.

Consider Long-Term Care Insurance

insurance in dictionaryAn incident that warrants long-term care can have a negative impact on your retirement nest-egg. Though it’s uncomfortable to think about, determine how you will pay for care services in case you face a situation that calls for it. Perhaps, one of the fool-proof ways to protect your nest-egg from this risk is long-term care insurance, and it is best purchased during your 50s.

Long-term care insurance is an expensive policy, but one ways to shrink its cost is through buying early, ideally during your 50s. At this point, you are still healthy and far from possibly needing care, thus you will be charged with a lower premium compared to an applicant who’s in his or her 60s. More so, most companies give discounts to applicants with good health and this price-cut is locked in. Meaning, it will still apply even if you develop health conditions in the future.

READ: Planning for Long Term Care

Evaluate your Plan

planning deadlineLook at your goals and where you are right now. Are you on-track or are you lagging behind? During your 50s, you need to see what you have now, how much it will grow by the time you reach retirement age, and if that would be enough. Retirement calculators can help you with this. You can also talk with a professional to know if you’re well on your way or if you need to catch up.

If you need to catch-up, especially if you’re just starting saving now, you can take advantage of catch-up provisions for retirement plans. If you are on-board a 401(k), you can contribute by up to $23,000 a year with a $5,000 catch-up ceiling for 2014. For 2015, the limit would increase to $24,000 with a $6,000 catch-up provision.  Meanwhile, IRAs, both traditional and Roth, allows an annual maximum contribution of $6,500 with a catch-up limit of $1,000 for 2014 and 2015.

Just like with any major transition in life, retirement requires planning. Whether you’re just starting out in life or in the peak of your earning years, make it a point to factor in retirement every step of the way.

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