Make These Moves in Your 50s to Set Yourself Up for a Secure Retirement — The Motley Fool



His 50 is a crucial moment on the road to retirement. You will most likely make more money in your 50s than in your previous career, which means you will have more financial flexibility than ever before. On the other hand, you may have to pay more expenses, such as your children's college tuition bills. However, if you want to retire comfortably, you must spend your 50 years focusing on goals that can help make that happen. Here are some to aim for.

1. Build a fully charged emergency fund

Without a solid level of savings, you run the risk of accumulating debts the next time an unplanned expense occurs. And taking on debt in the years leading up to retirement increases the risk of carrying that financial burden to your golden years and fighting for it. A better bet? Get a healthy emergency fund, ideally, one with enough money to cover up to six months of living expenses. This will help you avoid debt if you lose your job, if you find a home repair or if you receive unusually high medical bills.

Middle-aged man sitting on stairs wearing gray sweatshirt over yellow shirt

Image source: Getty Images.

2. Increase your savings.

Once you turn 50, you will have the opportunity to catch up on your retirement savings. This is because the contribution limits of IRA and 401 (k) are higher for workers 50 and older. Currently, you can contribute up to $ 7,000 a year to the first, and $ 25,000 a year to the second. Capitalizing update contributions can increase your savings in a significant way. If you are 57 years old today and you want to retire at 67, save $ 25,000 a year between now and then leave you with an additional $ 345,000 in your savings, baduming your investments generate an average annual return of 7% during that time. Even if you can not reach a maximum of 401 (k), try increasing the contributions of your retirement plan during your 50 years, so that you have extra income once your golden years have elapsed.

3. Finance a health savings account.

Health is one of the biggest current expenses of retirees. That's why it's smart to contribute to a health savings account, or HSA, during your 50 years. The money you contribute (on a tax-free basis) can be invested to become a larger sum, and as long as you use that money for qualified medical expenses, you can withdraw money without taxes. To be eligible for an HSA, you must be enrolled in a high-deductible health insurance plan (that is, an annual deductible of $ 1,350 or more for individual coverage and $ 2,700 or more for family coverage). You can contribute up to $ 3,500 to an individual HSA this year, or up to $ 7,000 for a family, and if you are 55 or older, you receive a contribution of $ 1,000 to get up to date.

4. pay your mortgage

At the height of medical care, housing is another expense that tends to consume a large part of the income of retirees. Therefore, if you can pay your mortgage on time for your last year, you will have to pay a monthly bill less. A relatively painless way to eliminate your mortgage is to take your monthly payment, divide it in two and pay that amount every two weeks. By doing so, you will make an additional mortgage payment every year. Keep that practice for your full 50 years, and there's a good chance you'll be free of housing debts when your career closes.

5. Buy long-term care insurance

It is estimated that 70% of people over 65 end up needing some kind of long-term care. And without insurance, the costs can be astronomical: think of $ 48,000 a year, on average, to reside in an badisted living center, and approximately $ 90,000 to $ 100,000 a year, on average, for nursing home care. elderly, depending on whether you receive a private service. room. Without the long-term care insurance, you will be just to cover these costs, since Medicare will not take over the account, so instead of taking that risk, apply. The best time to do it is in the early 50's. At that time, you are not paying premiums too early, but you are also more likely to get a favorable premium rate based on your age and health status. The cost of your policy will depend on a number of factors, such as the amount of coverage you want to insure, so compare and see what options are available to you.

Although your 50 is a time to continue focusing on your career, it is also a time to start thinking seriously about your golden years. Make these smart moves and lay the foundation for a financially secure retirement.


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