The pre-golden years of life are usually some of the best ones. By the time people reach their 50s, they are likely to have experienced their share of ups and downs, highs and lows, and have many memories and stories to share. With all of the wisdom and money one has accumulated over time, the 50s is the ideal time to really start enjoying life. As per Scott Tominaga, the middle years of life can also be fraught with financial difficulties. One might have to pay for their children’s college tuition, marriage, and other expenses during this phase of life, alongside preparing for retirement. Hence, financial planning in the 50s is extremely important.
Scott Tominaga underlines a few financial planning tips people in the 50s must follow
As a person crosses their 50s, retirement would no longer be a far summit. The 50s can be an ideal time to plan for life after retirement and get the finances in order. Proper financial planning is necessary to ensure that the finances of a person are on track to support their financial future. Here are a few financial planning tips people in the 50s must follow. It is better to prioritize paying off high-interest debts like credit cards and personal loans to reduce financial burdens in retirement.
- Clear the loans and debts: First of all, one should try their best to pay off their debts and loans prior to retirement and get free from the financial burden. No person wants to spend their retirement years worrying about loans, debts and EMI payments. Hence, paying them off by the 50s is important. People should typically prioritize paying off high-interest debts like credit cards and personal loans.
- Plan for retirement: During their 50s, people are likely to be at the peak of their career, and hence they should try their best to boost savings at this point. After all, these few years might be the last earning years of a person’s life. Investing in a retirement plan during this time would be a good idea. An ideal retirement fund should be enough to replace their income as a person retires. People need to envision their life after retirement, while taking their desired lifestyle and potential healthcare expenses into account, and plan accordingly.
- Lower the expenses: The number of dependants of a person typically goes down after they have crossed their 50s, and hence this would be a good time to lower the overall expenses. At this stage, one is still likely to earn a consistent income, which helps them to increase their savings. People in their 50s should try their best to downsize their lifestyle and increase their retirement savings.
- Boost retirement savings with Individual Retirement Accounts (IRAs): IRAs provide tax advantages for retirement savings. There are multiple types with different tax treatments, so saving in both Roth and Traditional IRAs can provide a person with options when pulling money in retirement.
As Scott Tominaga mentions, in addition to following the pointers mentioned above, people in the 50s also must try to take advantage of retirement catch-up contributions. If possible, they should maximize 401(k) or IRA contributions. After entering their 50s, one can benefit from higher maximum contribution levels designed to help people who are behind on retirement savings to catch up.
