What Changes at 50?

For many of our clients, turning 50 is a significant milestone for several reasons:

You’re wealthier

There’s less overhead (kids are grown)

And you’re a decade out from retirement

Here are a few tips to help you maximize these critical years:

Take advantage of catch up contributions.

Currently most retirement account contributions max out at $23,000 per year (this number adjusts for inflation every few years).

But if you’re 50+ there is a “catch-up” provision that allows you to sock away an extra $7000 yearly.

By taking advantage of this, you potentially add an additional $110,000 to your balance sheet by age 60 (assuming average market returns and an inflation adjustment on your contribution).

These extra funds can add years to your retirement (depending on your spending) or be used for other endeavors like: buying a 2nd home, philanthropy, starting a business etc.

Begin diversifying

Your 30’s and 40’s are often characterized by very narrowly focused wealth accumulation.

In your 50’s (while accumulating wealth is still a priority) your objective begins to shift from wealth accumulation to wealth disbursement and preservation.

At this time it’s wise to start considering less volatile alternatives for your portfolio.

Whether that’s incorporating more bonds, cash, and cash alternatives, maintaining broad exposure to stocks and other volatile asset classes could delay your retirement date by years in the event of a market downturn.

Begin protecting

Health and longevity are two of the biggest risks to your retirement.

Whether it’s outliving your money, or needing to spend all of it on healthcare costs, not addressing these two could prove disastrous.

To ensure that neither of these risks become financial realities — one should consider insurance (and other financial products) to mitigate their potential impact.

Pensions (if you have access to one) and annuities are ways to address you living too long.

Effectively they’re contracts with insurance companies (or pension funds) to ensure that their recipients receive a paycheck indefinitely.

When structured appropriately, they provide a surefire way to make sure you never run out of money.

Long Term Care Insurance is another product more targeted at health concerns rather than your life span.

These policies insure against the risk of chronic health conditions in retirement. Health conditions which often are not covered under medicare.

If you’ve ever had to finance a loved one’s stay in a nursing home or assisted living facility, then you are likely well versed in the cost associated with these programs, and would understand the benefit of insuring against their risk.

Evaluating the addition of these products in your 50’s is likely the last (or 2nd to last) window you’ll have to do so.

Cheers