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Investment Advisory Services are offered through Bright Futures Wealth Management and/or Cetera Advisors LLC registered investment advisers.  Securities are offered and sold through Cetera Advisors LLC, - A registered broker dealer. Member FINRA, SIPC. Bright Futures Wealth Management and Cetera Advisors LLC are not associated entities. Cetera is under separate ownership from any other company. Bright Futures Wealth Management is under separate ownership from any other company. Perrotto Private Wealth is under separate ownership.

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The ultimate financial cheat sheet for 50

November 7, 2017

This is it for you. You finally hit 50, you are in the last stretch of putting in those long hours working, to being able to cross the finish line and retire. This is by far the most critical time for you. Every decision you make has a large outcome on the quality of your retirement. What plans and investments you

 

make now, may be the difference of living comfortably, and having to work an extra 5 years to get there. Also, when you reach your 50s, you could start feeling a financial pull from not only your children but your parents, as well. Regardless of the pull from your family, it is perfectly fine to begin focusing on yourself and putting your financial future first. There are several ways that you must work at to ensure your financial stability when you hit retirement.


Double up on your retirement contributions. At this point in your life, your largest expenses should be behind you, and especially if your employer matches, you should be contributing as much as you can towards your retirement. If you feel you are behind a bit on your retirement savings, great news, you just broke the age where you’re allowed catch up contributions for your 401(k) and IRA. If you want to save even more than you are allowed to with the extra contributions, you can consider opening a second IRA or Roth IRA to stash that extra cash away for retirement. Remember, Roth IRA’s distributions are tax free based on a few rules. It’s great to be adding to your retirement plans, but you may want to discuss dialing back the risk on your investments with your financial advisor. When you do this and how much you reduce it depends largely on how much longer you plan to work and what your financial situation is at the time, at worst, sit down with your advisor, and go over your goals for retirement. 


Pay off your debt.  This right now is your prime earning time. The more money you have in your hand that can grow, compared to the interest you’re forced to pay on debt can make or break your budget. Once you have paid off high interest debt, move onto other bills that, while they aren’t actually debt, can easily take a bite out of your retirement savings. You most likely don’t have too many years left on your mortgage if you have lived in your home for quite some time, so why not pay it off? The more debt you get rid of now, the longer your retirement savings will last you, and that’s one last thing you have to worry about.


Grow your emergency fund. Just because your 50 doesn’t mean you shouldn’t have an emergency fund. You should have at least six months of expenses in a liquid account, and in all reality, you should have one year. This will protect you against any hiccups in your life. Even if you don’t use that money for an emergency, it will still be there when you retire, giving you an automatic boost to your retirement.


Be proactive in your tax planning. Once you retire, your dollars have to stretch like never before. So you’re going to want to keep more of what you make. Meet with a licensed CPA to maximize your deductions, since this is also the time when you are likely to be paying the highest taxes.
Consider your long-term care plans. Many people find long-term care insurance expensive and they are mostly considering buying it right when they are also facing the financial challenge of retirement many opt not to buy an expensive type of insurance that they are not certain they will use. One new option that helps alleviate those fears of not using the insurance is hybrid policies that offer life insurance with a long-term care option attached, or the use of accelerated death benefits. This would be a great time to sit with your advisor and go over these options, to find out which one works best for you. 


Enjoy life. You’re at the prime of your life. Don’t forget to look at the details. Your grandchildren. Your success story you created for yourself. Every life experience that got you here today. Enjoy it all.
Once you reach your 50s, you should be in one of the best financial positions of your life, and you need to use that position to your advantage to prepare for that day when you do retire. Work hard to eliminate any outstanding debt and get serious about your retirement so that you are adequately prepared for the day when you retired and aren’t earning a steady income.
 

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