Freedom Financial Provides Ways to Keep Your Retirement on Track at Age 50
Age 50 is a pretty big milestone when it comes to retirement. At this point, you have most of your working years behind you and retirement is looming on the horizon.
That means your window for saving up for retirement is coming to a close. Check out recommendations from Freedom Financial on how you can make your next 10 or 15 working years count to ensure you reach your retirement goals and can comfortably retire when you’re ready to leave the workforce.
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Max out your retirement contributions.
You’re allowed to increase your 401(k) contributions by $6,000 each year starting at age 50. On top of that, you can increase your IRA or Roth IRA contributions by another $1,000 per year.
If you’re not already maxing out your retirement contributions, age 50 is the best time to start doing so, recommends Freedom Financial. It’s especially beneficial if your employer matches your retirement contributions.
Pay attention to asset allocation.
As you get closer to retirement age, you should pay closer attention to your asset allocation. Generally speaking, risk tolerance decreases as you prepare for retirement. Freedom Financial advises people to review their investment portfolio around age 50.
This is a good time to switch to safer investments. You’re too close to retirement age to assume there’s time to recover from a market decline.
Pay off your debt.
The more debt you have, the harder it is to retire. Even if you have enough money saved up to afford your cost of living and debt payments, it’s much less comfortable than if you’d already paid off your debts.
Age 50, is a great time to start aggressively paying off debts, according to Freedom Financial. Start with consumer debts like credit card debt and any auto loans. Pay off these debts quickly then work on reducing the amount of mortgage debt you’re carrying. Balance debt pay off with retirement savings so you can make progress with both goals.
Review your health coverage.
Protecting your health is one of the best investments you can make. As you age, health care expenses tend to increase. For that reason, it’s important to have health insurance to offset medical expenses.
Health coverage is less expensive at age 50 than it will be at retirement age. Getting covered now is in your long-term best interests. According to Freedom Financial, medical debt is one of the biggest causes of bankruptcy. You don’t want to lose your retirement savings, or worse get deep into debt, because of expensive medical expenses.
Make sure you have adequate insurance.
As your dependents become financially independent, your insurance needs change. Review your life and disability insurance coverage, for example, to make sure you have only what you need.
Being over insured isn’t necessarily beneficial and takes up money that you could instead spend on building your retirement fund and paying off debt. Freedom Financial recommends talking over your insurance needs with an insurance age or financial planner so that you’re adequately covered.
Even if you haven’t been serious about retirement savings up to this point, it’s not too late to get started. Reducing your cost of living and increasing your contributions will help you build up enough savings so that you can retire comfortably when the time comes.
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Category: Retirement
