In the present day scenario where so much emphasis is being given on appropriate financial Management from the early stages of the career, it is easy to feel stressed by the time you turn 50 and especially, if you have not planned your finances and investments for your post retirement life. While it may still be a solid decade away but it’s closer to reality than ever before. At age 50 ,it is a prime time in your life- a period when you are probably earning more money than you earlier did in your career, which gives you more flexibility, but at the same time, there are other very important issues like you’re facing college tuition bills of your children, or high expected expenditure on their wedding in the near future etc. This is a period when you have a chance to emerge from debt and start to see your investments make a serious contribution to your Net Worth.
Check List Of Personal Finance at 50 ;–
Although there are many general points which you must consider to manage your finances at all stages of your career like;
___ Make a budget about your Income and spending
___ Track your expenses
___ Put down your Debt especially high interest carrying credit cards etc.,
BUT ,it becomes imperative to have a checklist for all our Personal finances specifically when you are in the age of 50- 55 years. Some of these points which you should consider are as under :–
1. Shift More Heavily from Borrowing to Saving :–
It is expected that by the time you reach your age 50 years or so,you should have greatly reduced your debt and loan burden. Now, you must consider ways and means to grow your portfolio of retirement assets. The more you repay your debt especially high interest rate carrying credit cards balance, car loan etc, the more your monthly budget can go to savings rather than loan repayment.
2. Start Developing a retirement Plan ;–
At the age Fifty years or so, it is the right time to start making a retirement plan, although your retirement may still be a decade away. Furthermore, now’s a good time to review your savings and see if you are on right track to retire within the time frame you’re thinking about. There is no particular savings numbers to aim for, but try to do your best to estimate your living expenses in retirement. Then follow the 4 percent rule (the expected rate of annual inflation ) to find your anticipated annual expenses and subtract from your annual income and then multiply the difference by 25 (100/ 4) to see how much savings you’ll need e.g. if the difference is approx. $20,000 a year then you will need $ 500,000 in the savings (20,000 * 25 ) .
3. Re-assess Your Retirement Goals :–
You might have planned some long term goals in the past. some of those may still be pending. Now is the time to revisit all your goals, re-assess them, and plan them with a proper time frame, including when to retire and what kind of lifestyle you expect after retirement.
4. Catch-up Retirement Saving Opportunities :–
As per the statistics available through various surveys, about 30 percent of workers at 55 years of age and over don’t have much amount saved for retirement. But don’t worry, the government gives some catch up opportunities in the form of additional tax deferred retirement contributions. Anyone 50 years or older can put up to $24,000 a year into a 401(k) and $6,500 a yer into IRA.
5. Keep Your Asset Allocation Aggressive :–
At the age of fifty, it is still not late for investing in growth oriented instruments as you still have an investment time horizon of some 30 years or so. It is suggested that you follow 50:50 rule of investment i.e. about 50 percent in equity related investments and balance 50 percent in low income but more safe and conservative instruments like bank C Ds/ F Ds or debt plans. Further, if you are contributing heavily to your retirement plans, this positive cash flow will help smooth out some of the volatility of the stock market.
6. Update Your WILL :–
By the time you turn fifty, it is the time to have a close look on your will keeping in view your Net worth, and the attitude and approach of your children ,who are on the verge of adulthood and other family members. So, decide what provisions you’ve to make for your survivors.
CONCLUSIONS :–
with proper attention to your finances, this could be your greatest decade for wealth building and financial management. further, you try to have complete knowledge of the “social security plans” as there may be some ways by which you may be able to maximize your social security benefits. however, this is the time for action and not procrastination and if you follow some of the points mentioned above, you could retire confidently with the peace in mind ,without undue stress.