Your 50’s is the decade of your life where you should be focusing on preparing for retirement and ensuring a sound future for your family.
From getting completely out of debt to planning for your golden years, there are certain steps you need to take if you want to have a comfortable retirement and make sure your family has enough money to meet their basic needs when you’re gone.
Building financial security takes time and work, but in the end you’ll be able to live without worrying about money. So how do you get there?
This is the fourth part in a series of financial goals you should set and achieve in each decade of your life. Today, we’ll take a look at 10 personal finance goals for your 50’s.
1. Pay off your loans and be debt free
If you still have a mortgage, car loan, student loan debt or credit card debt, try to pay them off at the maximum amount on a regular basis. The sooner you get these paid off, the sooner you can retire. Plus, you’ll be able to save more money for other important things like your children’s education or your planned retirement lifestyle. Most importantly, being debt free will reduce your costs of living in retirement, allowing you to enjoy your golden years.
2. Be insured
Review and update your insurance policies to ensure that you’re getting the right amount of coverage. These include life insurance, health insurance and income protection insurance. In case you pass away or are unable to work, insurance can help you and your family pay for basic living expenses and any debt you still owe. Also consider taking out long-term care insurance or long-term disability insurance to insure against a situation where you can no longer work or take care of yourself because of an illness, injury or disability.
3. Save for your children’s future
If you have children, you’ll obviously want to help and support them until they become financially-independent adults and can provide for themselves. You can do this by putting money away regularly in a savings account for your children. The money can then be used to help pay for their college education and other things such as their health insurance premiums, mobile phone plan, or even a car, home or wedding.
4. Have a will and estate plan
If you don’t already have a will and estate plan in place, do so now. These documents should inform family members how you want your assets to be distributed, including your money and property, and who you want your children to be taken care by in the event of your death. You can seek the help of a solicitor or estate planning specialist to create your will and estate plan.
5. Increase your retirement savings
By the time you reach your 50’s, you should be able to max out your retirement contributions, whether that involves a super fund or an individual retirement account. You could also consider getting a side job to increase your savings. Remember, the more money you have saved up, the better off you’ll be when you’re retired.
6. Reconsider your investment strategy
As you near retirement, it’s best to invest more in bonds but with the current low interest rates it’ll be better to grow your savings by investing more in stocks. On the other hand, it’s important that your investments aren’t too conservative or too risky. If you want a balanced allocation, you can have a portfolio that holds 50% stocks and 50% bonds. Overall, your investments should give you high returns that’ll last up until you’re 100 or beyond.
7. Prepare for a retirement lifestyle
This means you should be ready to retire even though you don’t plan to retire any time soon. The reason is that people in their 50’s can be considered expendable, so you need to consider the fact that you could lose your job. To help you prepare for retirement, save as much money as you can and reduce your spending. According to the Association of Superannuation Funds of Australia (ASFA), if you want to live comfortably in retirement you’ll need $42,861 a year if you’re single or $58,784 a year if you’re part of a couple.
8. Transition to retirement
If you’re over 55 years old and planning to retire but you don’t have enough savings, you can think about transitioning to retirement. A popular way to do this is by drawing on your super while you continue working part-time and making extra contributions to your super at the same time. It’s like you’re half working and half retired, which will make it easier for you when you actually retire.
9. Plan what you want to do in retirement
Knowing what you’d like to do when you’re retired can help you work out how much money you need to save right now and make the necessary plans. For example, you might want to start a business, study again, travel the world, pursue your hobbies or spend more time with your grandchildren. Or maybe you’d prefer to downsize your life by moving to a smaller home and having only one car in order to save more money.
10. Prepare for aged care or to care for your parents
As you get older, you may require help from family and friends or from aged care professionals with activities such as shopping, cooking or driving. Consider your aged care options, including whether you want to be taken care of in your own home or in an aged care facility and if you’re eligible to receive Centrelink payments for older people. You should also consider the fact that your own parents may need you to help take care of them, so budget for that as well.
Reaching your goals
The financial goals you should achieve in your 50’s are all about preparing for your retirement and securing your family’s future. But if you have debt and other financial problems that are getting in the way of you accomplishing your goals, the team at Credit Counsellors Australia can help you.
Contact us today and we can have a chat about the best ways to manage your finances so you can reach your goals and retire comfortably.