For many people, their 40s and 50s are still a period of financial transition. Some people are opening their own businesses while others are considering retirement. No matter where you are at this point in your life, it is likely that you still have some financial goals to work toward. These tips may help you work towards a brighter and more financially secure future.
Pay into Retirement
If you have an employer sponsored 401(k) plan, we suggest creating a goal to contribute the maximum amount allowed based on the IRS limits ($18,500 in 2018). Alternatively, if you own a business and don’t have a 401(k) through an employer, you can may be able to set up your own retirement plan to contribute with tax-deferred funds.
While you are adding money to your savings regularly, also make sure to project your savings, ensuring you are on the right track. If you feel like you’re off track and you’re over the age of 50, you can contribute an additional $1,000 to your IRA and $6,000 to your 401(k) to help catch up.
Monitor Stocks and Bonds
It is important to keep your stock/bond allocation near it target design and may require periodic rebalancing of the account. This is something you should discuss with your Financial Advisor.
Consider Life & Long Term Care Insurance
Life insurance policies can be important if you have children or any other dependents. If you were to pass away suddenly, your dependents may rely on life insurance proceeds to maintain their standard of living.
You might also consider long-term care coverage, especially if you are in your mid-50s. If you are ever in a position later in life, with illness or injury where you need assistance with daily tasks, this type of insurance plan may pay for these expenses.
Pay Down High-Interest Debts
Credit cards, student loans, and some car loans are all high-interest debts. You can use one of several techniques to fight debt. You should always start with a budget so you can determine what exactly you can afford.
Then, you need a battle plan. Will you use the snowball method to start with the lowest balance and work your way up? Will you use the avalanche method and start with the debt that has the highest interest rate? You can discuss strategies with your financial advisor to establish the right plan.
Consider Social Security Benefits
When was the last time you estimated your Social Security benefits? This is a good time to assess whether you have the ability to delay until age 70 to collect the highest monthly payment in the future. Knowing which benefits will be available to you in the future can help you with this decision.
Create a Retirement Plan
A retirement fund is great, but you also need a retirement plan. Will you be moving into a smaller home? Are you considering buying a home in an area with a lower cost of living? Will you be refinancing your home to lower your debt?
Your retirement plan should take into account your current budget, current savings, and future savings but also consider what it is you want to do in retirement with your time. Are you setting aside enough right now to meet your goals in 10 years? 20 years?
Update Your Estate Planning
Review your estate planning documents and make necessary updates. If you have been divorced, remarried, or added new children to your family, you may want to change your beneficiaries. Also If you have accumulated new assets, your estate plan should be reviewed. Furthermore, changes in tax law might also impact your estate plan.
Connect with a Financial Advisor
Building a relationship with a financial advisor you trust can be beneficial for planning your financial future. An advisor can create a customized plan tailored to suit your needs. Sharkey, Howes & Javer can help you plan for retirement. Get in touch today to learn more about your options.
