Are you hitting your 50s now and starting to panic because your retirement plan isn’t cutting it? While this isn’t an ideal situation, it’s truly never too late to start socking away more money. This will entail a lot of hard work and commitment, coupled with more aggressive strategies, but it’s definitely possible to secure a nest egg at your age.
Now that you’re in your 50s, you should harness this time in your life where your earning power and saving abilities are at their highest. Check out these tips to get going on your retirement plan:
Put the max contribution into your 401(k) and take advantage of any company matches. Put the max amount in any IRA accounts you may have as well. You’ll have to “catch up” on your 401(k), which for this year is $6,000 above your contribution limits. Don’t just assume what you’re currently socking away is enough. There are online calculators that will show you just how much you need to save each week, month, year to hit your retirement goals. Try this one by Bankrate.
In general, you should be saving at least 20 percent of your income throughout your 50s. After all, retirement is coming up quickly in the next decade and you need to be ready. Save more money in taxable accounts such as brokerage accounts, and never take early cash distributions, even when switching jobs.Taking out cash from your retirement plan is a no-no. If you do this before the age of 59 ½, you’ll get hit with sky high taxes and early withdrawal penalties.
Any bonuses, tax refunds or unexpected lump-sum payments should go straight into your savings account. This doesn’t even cover your emergency fund, which is separate and should be able to sustain you for three to six months in the event you are laid off sooner than you expected. Get aggressive on stocks at this time as well.
Speaking of the unexpected, you should also consider buying more life insurance to provide for your spouse and children should you pass on. Find out what long-term care insurance can offer you, and above all, protect your greatest asset: your home. This means making sure your house has enough coverage in terms of homeowners insurance. Avoid inflating your lifestyle, especially if you still have a ways to go in your investment goals, says US News and World Report. Live within your means for now…you’re almost there!
Start up a Small Business
As you approach retirement, you’re probably at a time in your life where you want to do something fun just for yourself. If you have a special hobby or pastime that you enjoy, perhaps you could turn it into a money-making opportunity. With the Internet such a big part of our lives today, it’s so easy to start up a small business online without investing a lot of overhead and capital. If your business becomes lucrative as you face your actual retirement, consider selling off your business to make even more money for your nest egg.
Stay Updated on your Plan
As someone in their 50s, you can’t just develop an investment plan and forget about it. Your plan needs continual updating, checking and verifying to ensure your plan is always working in your best interests. Getting a good financial planner or advisor can be a big help. Just be careful in your vetting process to choose a reputable broker or advisor who won’t take advantage of your situation.
That being said, everyone should have access to a qualified securities fraud lawyer in case things don’t go as planned. Contact Thomas Law Group today to find out how we can protect you against excessive or unauthorized trading, misrepresentation or unsuitable recommendations.