Turning 50 is a significant milestone, and it’s the perfect time to evaluate your plan for retirement and get serious about preparing for the future. With potentially 15 or more years before you stop working, this is the beginning of a pre-retirement stage that is critical to ensuring the next phase of life is comfortable and financially secure.
Here are a few important steps you should take as you enter your 50s:
Evaluate your current financial status and create a plan. People in this stage of life may be funding college for their kids, or perhaps they have goals to travel or upgrade their home. During these prime earning years, many people attempt to fund their retirement savings without much guidance or direction. Or worse, they are too focused on immediate needs and decide to put off saving for the future. By working with a financial advisor to get a clear view of your current status and develop a comprehensive financial plan, you can decide when you want to retire and what your lifestyle might look like, while taking steps to manage your current obligations and ensuring you’re preparing wisely for the future.
Boost your retirement savings. Make the maximum allowable contributions for your employer-sponsored plan to take advantage of all available employer-matching funds. This is also the time to leverage catch-up contributions. In 2024, the contribution limit is $23,000 for 401(k) plans and $7,000 for IRAs. However, once you reach age 50, you qualify for catch-up contributions, which have maximum limits of an additional $7,500 for 401(k)s and $1,000 for IRAs.
Plan for health care costs. Review your current health insurance coverage and consider what your cost for insurance will be through age 65, which is when most people become eligible for Medicare. You should also evaluate the need for long-term care insurance. It can help cover costs associated with chronic illnesses or disabilities that require long-term care. Long-term care insurance is generally more affordable when purchased at a younger age, so starting the process at 50 can be beneficial.
Preparing for retirement at any age requires a proactive approach and careful planning. The most important step you can take is to develop a complete financial plan alongside an advisor. The decisions you make today will have a major impact on the lifestyle you can have in the future. At Willis & Machnik, we can help you evaluate your spending and saving habits, as well as develop a tax-efficient investment strategy, to help you work toward your retirement goals.