Entering your 50s may not be as exciting as it would be in your younger years but you know that you still have a lot to offer into this world. It is a time when you finally feel the years on your physical body yet you have never felt more alive with the memories and experiences that life have given you over the years.
When you reach this decade, you know that your retirement is fast approaching. That means you need to be aware of what to do during your pre-retirement years. You still have a lot of money concerns to deal with and now is the time to make sure that they will not ruin your retirement.
Financial issues you need to clean up in your 50s
By the time you are in your 50s, a lot of things have already happened in your life. If your age is right along this decade, you are most likely a part of the Baby Boomer generation. You have a lot of financial successes and mishaps under your belt. You should have gone through a couple of debts, loans, profits and investments. All of these should have given you a lot of insight about your personal finances. And along with that, are some financial clutter that you need to clean up.
One of the strategies for a good retirement is to make sure that you deal with the money concerns that you will encounter in your 50s. Time is running out for you to deal with them so you have to start acting on them now.
Given that, we have compiled 5 financial issues that you need to clean up before your 50s are up. That way, your road towards retirement will not be as bad as it could have been.
Give your kids their financial independence. Believe it or not, some Baby Boomers are still caught up with the financial problems of their kids. In most cases, they are doing this even when their kids already have a family of their own. As soon as your kids are working you need to let them go. It is not just to keep your money for retirement. It is also to teach them financial independence. That way, they can learn to rely on themselves when a financial crisis strikes. Even if your child is still in college, you need to start allowing them to make their own financial decisions. If they need money, you can help them out if you wish – but not at the expense of your retirement. That way, you can be sure that you will not be a financial burden to them after retirement.
Pay off your debt obligations. If you plan on retiring when you are 65 years old, that leaves you with 15 years or less to pay off your debts. This is one of the serious money concerns that you need to take care of. Otherwise, your debt payments can weigh heavily on your retirement fund. Do not let this happen. There are debt relief programs like debt consolidation or debt settlement that can get your out of debt in 5 years or less. If you still have that lengthy mortgage obligation, make sure you can meet the payments every month. In case you have more room in your budget, you can try to arrange with the lender a higher monthly contribution and a shorter payment term.
Improve your credit score. At this point in time, you should have a long list of credit history already. For some, you may even have a bankruptcy entry in there. Your 50s is a great time for you to improve your credit score. You want to make sure that you can erase the mistakes that you made in the past.
Downsize your expenses. Given that most of the kids have moved out by now, it may be a great time to think about downsizing. We love to buy things in the past and that should have accumulated into a significant amount of clutter. Get rid of these and see if you can opt to move into a smaller home. Sell your bigger home and buy a smaller one. That can help decrease your monthly utility bills. You can also consider where you can save on your monthly payments.
Think about your financial goals. The last of your money concerns that may need spring cleaning is your financial goals. See the progress of your goals and see if your financial strategies need tweaking. Or maybe there are goals that you need to give up on at this point. Review all of them and see how you can revise them to suit your current financial situation and aspirations.
Redefining your source of income
Another thing that you may want to look into is your source of income. This is an important part of your life because of the preparation that you need to make in your retirement. But while there is still a need to have a career, it may not be as pressing as when you were in your younger years.
Now that the big expenses are over, with the exception of your retirement, it may be time to slow down or take a risk to pursue your own business. According to an article published on USAToday.com, 76% of the people who left the workforce last year are over the age of 55. This is a statistic coming from the Labor Department. There are probably a lot of reasons why this is so. If could be because they want an early retirement or something negative like being forced to retire by their employers. Making way for a younger workforce is sometimes a necessary move for some companies.
For other pre-retirees, the decision is made so that they can pursue their own business. USNews.com revealed that Baby Boomers have all the potential to be great entrepreneurs. According to the statistics they got from the Ewing Marion Kauffman Foundation, 23.4% of entrepreneurs back in 2012 are between the age of 55 to 64 years. The article admits that this growth in entrepreneurship for those in their 50s and 60s is caused by the recent economic collapse. But it seems to be working just fine for everyone. The article provided some reasons why this age group can be great entrepreneurs and here are two of the important ones.
You can afford to be risky. At least, this is true if your retirement fund is already secure and you are right on track with your plans. Now that the kids are out of the house, you only have to fend for yourself and your spouse. You can take on a few more risks now.
You have years of expertise and experience behind you. With age comes wisdom and that is because of what you have gained with the years of work you have gone through. It is impossible that you did not pick up anything useful that will make you a great entrepreneur. It is time to put that to good use so that anything that you can earn will go only to your pocket.
While it may be scary to venture out on your own, the potential to earn a lot when you have your own business is there. Include this as one of your money concerns. You can opt to work on a hobby or something similar. Try it because you may never get another chance to do it. Besides, you want to improve your earning potential so you do not have to work in your retirement.
Important questions to ask in when you are in your 50s
MoneyNews.com provided some interesting statistics about people who are working beyond their retirement. From 11.5% in the 1990s, 18.5% of 65 years old and above are still part of the work force. That is a huge increase in the past 20 years. You do not want to be a part of this statistic so you should try to make sure that everything is in order while you are still in your 50s. Take care of your money concerns before it is too late.
As you go through your last decade before retirement, you may want to ask yourself a couple of questions that will set you up for a good future when you retire.
What is the status of my retirement plans? If you do not have enough money, you need to work double time to make sure that you will have sufficient funds.
Are any of my financial goals still realistic? Smart money management begins with setting goals but there are instances when these goals have to be reviewed and revised. As you enter your 50s, make sure you do this task.
How much assets have I acquired? If you have none, that is alright. You could work hard to acquire assets but try not to take on more debts to do so. If you have them, make sure that you prepare the documents that will determine who will get them in case you pass away.
What are the tax implications on my finances? Some people have no idea about the tax implications of senior – especially when it comes to their retirement funds. You need to learn about this because even as early as your 50s, you may have additional tax breaks that can increase your net income.
All of these money concerns will have to seriously considered once you reach your 50s. Do not fret if you still do not have sufficient retirement funds. You still have time for that but it will be a bit harder to reach your goals. But you need to start working on it now.
Diana hates debt just as much as you do. She is a finance writer for National Debt Relief. She aims to provide the best information to win the battle against debt.