More Money, More Problems, Less Time in Your 50s

Jay Gershman |

Jay L. Gershman, Retirement Visions LLC, West Hartford

Hello 50-somethings? It’s me Jay. All summer long we’ve been taking a deep dive into money for each stage of life and it’s finally your turn. There is rarely a backyard barbecue where I am not asked a thing or two about what to do in the decade leading up to retirement. I love reminding 50-somethings that money can be like fine wine. With controlled conditions and care, you may have something very worthwhile to enjoy. Let’s look at some of the priorities to focus on in order to try to maximize your money for retirement while you still have some working years left.

Reviewing Your Retirement
By your 50s, you may have a sizable 401(k), an old IRA rollover, and maybe even an old pension from your first job. Wouldn’t now be a good time to understand how you’re invested, how your funds are performing and how much that pension will pay? Remember, the decisions you made years ago might not make sense now that you’re getting closer to retirement. Find a reputable firm or advisor to review your entire portfolio, including non-retirement savings and Roth IRAs, today. Don’t wait until the last minute when you have no time to do anything.

Protecting Your Money
Most people have a set it and forget it mentality when it comes to saving, which means that the contributions you’re making today might still be the same as when you had college debt, young children, or a new house. Things are different now! You’re maybe paying more taxes and have incentives to save more. Unfortunately, many people falsely assume their situation is hopeful and decide to bury their heads in the sand. Luckily, it’s not too late. In 2019, the law allows 401(k) participants over 50-years-old to defer as much as $25,000 per year. Increasing your contributions will not only defer federal and state income taxes but it will also help you make up for lost time!

Understanding Social Security
No one article can sufficiently explain the complexities of social security and the strategies to assist you in maximizing what you receive over your lifetime. However, statistics consistently show that people are living longer and continuing to take social security benefits at age 62, facing the maximum penalty for collecting early. Instead of following the crowd, take time to read up on social security, attend seminars and have your benefit strategies outlined for you. You may just find out that there’s essentially “free” money with your name on it.

Spending, Spending, Spending
How much do you think you’ll need for income if you retire today? That’s a question I ask every new client and it is almost always met with a look of bewilderment. In order to understand your future spending, you should start with how much your life costs today. From there you can project debt that will be paid off by retirement and estimate your “fun” budget. If you can find ways to save now, you might even consider increasing your 401(k) contributions or open a Roth IRA.

Fixing, Fixing, Fixing

Are the kids out of the house? Have your property taxes steadily increased? Is the work you’ve been putting off until after you paid for college becoming a necessity? Now is a good time to ask yourself, “Should I stay, or should I go?” Downsizing might provide major financial benefits that can be invested for earlier retirement. Otherwise, decide on how you want the house to look and find a reputable contractor to make it happen at a reasonable cost.

Just A Few More

Once you have the major priorities worked out, there are a few more important items to tick off your list before you turn 60.

  1. Review your will and have power of attorney documents prepared just in case
  2. Declutter the house and get the kids to help
  3. Review those old life insurance policies
  4. Verify all retirement plan beneficiaries
  5. Plan your next vacation because you shouldn’t put all of your eggs in your retirement basket. Have some fun now too.

Jay Gershman is the Owner and Founder of Retirement Visions LLC, a West Hartford-based financial planning firm that focuses on comprehensive life planning and financial management. For more information, visit Information and advice are for guidance only and opinions expressed belong solely to the author. Securities offered through Securities Service Network, LLC. Member FINRA/SIPC. Fee-based services are offered through SSN Advisory, Inc., a registered investment advisor.