50s

5 Ways to Build Retirement Stability in Your 50s

Alicia Rose Hudnett — Tue, 22 May 2018 09:00:31 +0000

If retirement planning hasn't been at the top of your to-do list, your 50s are the time to make it your first priority. Wait 10 more years, and your only choice of retirement options may just be to keep working. Here's how you can prevent that from happening.

1. Take advantage of catch-up contributions

Whether you've been a responsible saver or not, this may be your last chance to really build up your nest egg. Beginning the year you turn 50, you can contribute $6,500 to an IRA (that's an additional $1,000 for 2018) and $24,500 to most workplace retirement plans (that's $6,000 more than the standard allowable amount for 2018). (See also: 6 Ways Meeting the 2018 401(k) Contribution Limits Will Brighten Your Future)

2. Get an HSA

If you have a high-deductible health plan (HDHP), you can open a health savings account, or HSA. Contributions to an HSA are made on a pretax basis and remain tax-free if used for qualified health care expenses. For the 2018 tax year, if you have an individual plan, you can contribute up to $3,450, and if you have family coverage, you can contribute up to $6,900. If you are age 55 or older, you can contribute an additional $1,000.

A health savings account is similar to other tax-advantaged retirement accounts: Once you establish an account, you don't need to use up the funds each year, and you may be able to invest the money within the HSA, allowing the account to grow. And even if you've established the account through your job, you can take the account with you if you leave.

Before age 65, if you take a distribution from your HSA for non-qualified medical expenses, you may owe income taxes and a 20 percent penalty. But after age 65, non-qualified distributions are penalty-free (but not income-tax free), making it structured like a traditional IRA. Qualified health care expenses are always tax-free at any age. (See also: How an HSA Could Help Your Retirement)

3. Check your Social Security benefit

This is the time to begin thinking about how you will establish a base foundation of guaranteed monthly income that will cover your necessary living expenses. And for many individuals, your Social Security benefit will be the first part of that foundation.

If you haven't already done so, you can start by creating a "my Social Security" account on the Social Security Administration's website, where you can check your work history and benefit summary. This can give you a good idea of how much other savings you will most likely need in order to cover the shortfall between your living expenses and your Social Security check each month.

You can receive Social Security benefits as early as age 62, with one major caveat: You will receive 70 percent of your full earned benefit. To receive 100 percent of your retirement benefit, you must wait until your full retirement age, as determined by the Social Security Administration. For anyone born in 1960 or after, that age is 67.

So if you think that your Social Security benefit is going to play a substantial role in your retirement equation, it's worth waiting until at least your full benefit is available. Each year you delay, up until age 70, your benefit may increase 8 percent. (See also: 5 Questions to Ask Before You Start Claiming Your Social Security Benefits)

4. Sit with a financial planner

Now is the perfect time to sit with a financial planner who can help you look at what retirement will realistically look like for you. You can go over your expenses, which is the first step to figuring out how much monthly retirement income you will need. That, in turn, will indicate how big of a retirement portfolio you will need to generate that income.

A financial planner can also evaluate your investments and make recommendations that can make a huge impact on the growth of your retirement savings. After all, despite the fact that you may be retiring within the next 10 or 15 years, your investment time horizon is still 30 to 40 years, so it's critical that your portfolio reflects that. (See also: 7 Occasions When You Should Definitely Hire a Financial Adviser)

5. Consider long-term care

When people hear "long-term care," they often think it has to do with an insurance policy. But it's a more pressing matter than that. This is the age when you should start reviewing long-term care insurance policies (which cover expenses that Medicare doesn't) and evaluate your own assets to see if you have the ability to effectively self-insure should you need assisted living. If not, a long-term care insurance policy may be a good idea. (See also: The Best Age to Buy Long-Term Care Insurance)

Your 50s are as much about increasing your net worth as they are about properly managing and protecting your current assets. This may be your last chance to get it right.

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This article is from Alicia Rose Hudnett of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

14 Reasons to Celebrate Getting Older

Mikey Rox — Mon, 16 Apr 2018 08:00:07 +0000

I'll be the first to admit that I'm self-conscious about aging. Not so much the number (which is climbing to a hearty 37 years old this year) but rather that I can physically see the youth exiting my body as life experience replaces it. Getting older is a hard pill to swallow, but like everyone else, I have to do it, so why not look at the bright side, right? Thus, here are 14 reasons why blowing out one more birthday candle isn't such a bad thing.

1. You're more comfortable with yourself

Once you get over the hurdle of transitioning from a 20-something-looking 30-something into a full-fledged 40-looking 40-something, it starts to get easier. While I'm still anxious about aging, I'm not as worried about it as I used to be — like when I had five 25th birthdays because turning 30 was just too terrifying. Now I accept the process, plan a great birthday with someone I love, and have fun.

Superficiality aside, there are lots of other things that I'm more comfortable with now versus 10 years ago, like my personal and professional accomplishments, the relationships I have, my own autonomy, and having enough money to splurge on travel and nice dinners instead of bulk-buying ramen and cheap booze.

2. Retirement

If you've done what you can to set yourself up for a comfortable retirement, you can enter your golden years with excitement. Even if your finances aren't quite there yet, you can still make it work. You may not be able to travel the world like you planned, but things change and you'll find a way to make the most of what you've got. (See also: 7 Easiest Ways to Catch Up on Retirement Savings Later in Life)

Full retirement might not be what you want anyway, so part-time retirement may be more your speed. Basically, you'd have the freedom you've envisioned, but you'd fill some of that free time making money doing something you enjoy, like working part-time at a shop in town, driving for Lyft or Uber, or making crafts that you can sell on Etsy.

3. Discounts galore

Senior discounts are awesome, but before you even become an official senior, you'll start getting discounts on things like car insurance, which provides savings based on age and good driving records over time.

4. Your priorities change

What matters most changes as you get older and experience life's milestones, like getting married and having children. Neither of those things are in the cards for me — I did the former once, and that's enough — but my own priorities have changed based on what I would like for my future and how I plan to spend my money, like my mortgage, which is more important than the frivolous stuff on which I used to waste money.

5. Sex is better

Maybe it's because it takes more time in general to do the deed as you get older, but I've found sex to be much more passionate and meaningful in my 30s than it was in my 20s, and that's whether I'm in a relationship or not.

You also become more confident, and less tolerable of selfish partners, so as your standards go up, the sex you have just improves over time.

6. You learn to let the little things go

What mattered when I was younger — every. little. thing. — just doesn't anymore. I don't have the kind of time I did back then to worry about the trivial inconveniences. I brush it off and move on.

7. True friends reveal themselves

We go through a lot throughout our lives, and those crises will make or break friendships and other relationships. I used to think quantity mattered when it came to friends, but in the end, it's the quality of people with whom you surround yourself that will enrich your life.

At this stage, I'd rather have one committed person on the couch with me on a Friday night than pretend to enjoy the company of 20 acquaintances at a club, none of whom would be willing to give me a ride home if I needed it. (See also: 5 Friend Types That Can Hurt Your Finances)

8. Seeking the approval of others is a thing of the past

Do I care what people think about me? Yes. I would be lying if I said I didn't. But as I've gotten older, I care less about how they view me on the surface — how I dress, the way I look, the kind of car I drive — versus how they view my character. I've also accepted that I can't please everybody, so there's no point in trying.

Just do you and everything else will fall into place.

9. You don't have to do things you don't want to

I don't attend holidays or weddings or family vacations that I don't want to anymore. Life is too short to spend so much time (and money) being uncomfortable. Does this hurt other people's feelings? Perhaps. But there's a reason I'm saying no to these events. It's because it makes me feel uncomfortable, and I come first in terms of comfort.

10. You make more money (hopefully)

The older you get, the more experience you gain, and hopefully your paycheck continues to reflect that. Plus, you get to spend money on a home, children, and other things you always pictured spending money on as a typical "grown-up." (See also: How to Use Glassdoor to Earn More Money)

11. Food is better at parties

We barely ate at parties in my 20s, and if I did, it was bags of chips. But now, in my 30s, I attend parties with plates of hors d'oeuvres that hosts spend hours making. I'll take delicate crab puffs over stale chips any day.

12. You stress less about your physical appearance

I still worry about my physical appearance, and I'm in the gym trying to ward off pounds on a regular basis. But I've eased up on myself over the years, and now focus more on the health benefits of consistent sweat sessions, rather than having six- or eight-pack abs. (See also: 10 Ways to Age Well for $0)

13. You have a lifetime worth of memories and mementos

I have so many fond memories at age 36 and I feel like my life is just getting started. I'm looking forward to looking back on the memories 20 years from now. I hope I make myself proud.

14. Age truly is just a number

Once you reach a certain age, what is age anymore? Does 50 feel differently than 60? I'm not quite there yet, but I feel better physically, mentally, and emotionally now than I did when I turned 30, which makes me not as afraid to reach the next milestone birthday.

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This article is from Mikey Rox of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: