After spending about thirty years in the workforce, many people in their 50s are looking forward to retirement. They will likely become empty nesters as children move out on their own. Hopefully, there will be more time for the pursuit of hobbies and enjoyment.
But this is no time to drift from financial goals. Being closer to retirement means that there’s less time to correct financial missteps. Here are five money management items to focus on in your 50s.
- Focus on retirement saving. Once you hit 50 years old, you can contribute extra catch-up funds to your 401(k) and IRA. If you can spare it, this is a great way to boost those accounts. You may also want to rebalance the funds in these accounts so that you’re investing in less risky options.
- Focus on savings. Throughout your 20s, 30s, and 40s, the emphasis was on having at least a $1,000 emergency fund and then building up to three to six months’ worth of expenses in savings. By the time you are in your 50s, you need to always be aiming for six months at minimum. If you’ve already contributed the maximum to your retirement accounts, don’t stop saving. Every month’s worth of expenses you have in savings is another month you don’t have to dip into your retirement funds.
- Focus on debt. If you have any, pay it off as soon as possible. This is good advice for every age, but as you get closer to retirement age, it’s important to not have to spend money on paying off things you bought years earlier. And, as much as possible, don’t take on any new debt.
- Focus on expenses. Now is the time to cut spending on nonessentials. You don’t want to have to go from spending all your disposable income to having to scrimp and save when you retire. Scaling back gradually can ease you into this new way of life. Also, you’ll be able to put more into savings (are you noticing the trend here?).
- Focus on insurance. If you haven’t purchased life, disability and long-term care insurance, you should do this immediately. Not only will the costs increase as you get older, but your chances of needing it continue to increase. It’s a subject most people don’t want to think or talk about, but it’s necessary to secure your future.
If you’ve made all the right money moves before you hit 50, and you’re lucky enough to have weathered all the financial storms that can arise, it shouldn’t be too hard to focus on these money matters. Even if things have gotten off track in the past, it’s never too early to start trying to turn it around.
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