Making it to your 50th birthday can make you look back at the half a century you’ve lived and wonder what life will look like in the next chapter. When you pass that milestone, you start to think about retirement and how close it’s getting. You’re coming to the realization that this is no longer a distant concept but a reality that will be coming soon. You’ve worked hard to earn the right to leave full-time work behind you and begin to enjoy a full, relaxing, but engaging life. However, if you haven’t given that reality any thought, it can bring a lot of anxiety and unneeded stress.
At AMG-Inc, we think this is a great time to start moving the needle. Time is of the essence. Now more than ever is the time to start thinking of your retirement goals and putting every piece of the puzzle together.
Various sources of research indicate that many are not as prepared as they should be for their golden years.Remember, you leave your home 5 days a week to trade your time and skill for income. In retirement, you will rely on the amount of money you have saved (Cash, CD’s, Money Market, 401(K), Employer Sponsored Plans), combined with other vested benefits to produce the same cash flow you once worked for – i.e, Social Security, Pension, Annuities, Railroad Retirement. Not to mention, it needs to increase with inflation and last a lifetime! Could you imagine living in your 50’s with the same income you made in your early 30’s? If not, then don’t expect your retirement income to work this way. Other important things to think about is your health, family, debts, and retirement goals.
The great news is that your 50s are still a great time to kick it up a notch and boost your savings, pay off debt, and rebalance your investment portfolio.
Retirement savings amount older members of the workforce.
At AMG-Inc, we enjoy challenging our clients to consider exactly what retirement means and looks like for them. Through listening and learning about the clients we serve, our team is able to draw out a plan that will not only help, but in reality get them to the retirement they desire. Regardless of the amount of you have saved, we pride ourselves in providing a realistic view of the expectation you should have regarding your financial future. You deserve an honest, professional and transparent team that holds the Fiduciary standard in keeping your best interest first. So, use a few of the following questions to help challenge your current plan, assuming you have one.
How are your savings?
When you get to the age of 50, the IRS will start letting you put more tax-advantaged money in all of your retirement accounts. While the contribution limit for 401(k) plans is $18,500 for 2018, workers age 50 and older are allowed to save an extra $6,000 in their accounts under the so-called “catch-up rule”. That’s a total of $24,500 you can put away, as long as your company allows the catch-up contributions (most do). This applies to both the traditional and Roth 401(k)s.
The rules are unfortunately less generous for IRAs. Both traditional and Roth IRAs have contribution limits of $5,500, with an extra $1,000 allowed per year once you reach age 50. Be aware, though, that while traditional IRA contributions come with no annual income limits, Roth IRAs still do. During this time find ways to squeeze your budget, change spending habits, and funnel that extra money into your retirement accounts.
Check on your investments… again
If you haven’t spoken with your financial planner about how your investments are structured and allocated, now is an important time to revisit your portfolio and update it based on your retirement goals.
Once you’re in your 50s, two things become much more important: your risk tolerance — how well you stomach the value of your investments going up and down — and when you will consider taking distributions from your portfolio instead of reinvesting back in.
Get rid of as much debt as possible, especially the high interest!
Yes, we’re talking about credit cards. Get rid of the leech sucking balance as soon as possible. Ongoing credit card debt is like bleeding wound left untreated to your physical body. Although compound interest may be one of the greatest fundamental in investing, it does work in both directions. As the case goes, credit cards are a huge issue for many people, it can be a very high cost, and a obstacle towards saving money. Not to mention credit card debt also comes with zero potential tax benefit, unlike mortgage interest and student loan interest.
Right now, the average interest rate on credit cards is about 16.7 percent. That is more than three times the average rate on a 30-year fixed mortgage (4.7 percent) and five-year car loan (4.2 percent). source
If you are still paying off school related loans, or you’re kids student loans, look into paying these off soon as well. Especially if you used private student loans — which typically are several percentage points higher than federal student loans.
Take these debts into account when planning a real retirement strategy. Your future self will thank you.
At AMG-Inc, we understand that navigating through important financial decisions can be a struggle for you, your family and business. The results of these decisions will affect your overall financial well-being; including savings, income, and ultimately your retirement. At AMG-Inc we will consider the impact of inflation, taxation, rising healthcare cost and uncertain market risk to bring a solution that will solve your concerns, both short and long-term.
Because over ninety percent of our clients face similar financial concerns, we are confident that the skills we’ve composed while serving many alike, has allowed us to deliver on this promise. Please feel free to contact us for a free financial audit of where you stand.