4 Tips to Boost Your Retirement Savings in Your 50s
While the prospect of retiring may feel daunting, you may find that your 50s is actually the perfect opportunity to finally tackle those big financial goals. Your kids may be out of the house or close. You are likely earning more than you ever have before. With some discipline and planning, you can use this time to solidify your finances and set yourself up for a comfortable and enjoyable retirement.
Remember when retirement seemed so far away that it would never arrive? Now you’re in your 50s, and retirement is right around the corner. Time flies when you’re raising a family and building a career.
Not sure how to make the most of this time in your life? Below are a few tips to get you started:
Create a post-kids budget.
If you’re a new empty nester, you may feel like a kid again. You can make plans whenever you want. You have extra money now that you’re not paying for kids’ clothes, school supplies, groceries and more.
Now is the time to enjoy life, right? Yes and no. There’s definitely nothing wrong with enjoying your newfound freedom. However, don’t do so at the expense of your financial future. Create a budget that allows for fun but also helps you save money.
Downsize and simplify.
The spacious house with the big yard probably made sense when you had kids at home. But do you need four bedrooms now? Granted, you may have an emotional attachment to the home. However, by downsizing to a smaller house, you might be able to reduce your mortgage, insurance, taxes, utilities, maintenance costs and more.
Also, take a look around the house. How much “stuff” have you accumulated over the years? Are there things of value you could sell to raise money? Could a smaller house work if you got rid of some of the stuff that is rarely used? By downsizing, you may be able to significantly improve your cash flow and boost your savings.
Use catch-up contributions.
The IRS places limits on how much you can contribute to 401(k) plans, IRAs and other qualified accounts. After age 50, though, you’re allowed to make extra “catch-up” contributions.
For example, the contribution limit for 401(k) plans in 2016 is $18,000, but you can make a catch-up contribution of $6,000 above and beyond the regular limit. That gives you a total potential contribution of $24,000.1
Similarly, the traditional IRA and Roth IRA have 2016 contribution limits of $5,500. Again, though, if you are age 50 or older, you can make a catch-up contribution of $1,000, for a total potential $6,500 contribution.2
Safeguard your career.
Even the best-laid plans can get sidetracked by an unexpected event. Perhaps no unexpected event poses a bigger threat to your retirement plans than a surprise job loss in your 50s. You would not only lose the ability to save, but you might also have to dip into your savings if you’re unemployed for an extended period.
Take steps to make yourself invaluable. Learn new skills. Volunteer for the industry training. Be a team player and look for ways to bring additional value. You know your career and industry better than anyone. Perform an honest assessment of yourself and develop a plan to improve. Or, better yet, talk to your boss to see how you can become even more valuable.
Want to make the most of your 50s? Contact us–we’ll help you identify your priorities and risks, and develop an action plan. Let’s connect soon.
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15947 – 2016/8/3
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