The Trusted Advisor

Turning 50? Considerations for Retirement

Posted by Susan Redsicker on Jan 3, 2022 3:51:04 PM

If your fiftieth birthday is around the corner, it may be time to start thinking about some changes to your financial plan. We’ve outlined what you should keep doing, what you should evaluate, what you may need, what you should watch out for, and what you should plan for and consider all in one place.

  • What You Should Keep Doing: Contribution limits for 2022 have increased for 401(k), 403(b) most 457 Plans and Thrift Savings Plan to $20,500. And if you are over 50 the catch-up contribution limit is $6,500 for a total of $27,000! That is a lot of opportunity for the money to work for you with the years you have left working.

            A few items to note:

    • You cannot contribute more than 100% of your compensation
    • Not all plans allow catchup contributions, however the majority do, so check with your benefits specialist
    • 403(b) plans have required years of service for catch up contributions
    • Traditional and Roth IRA contributions remain at $6000

  • What You Should Evaluate: If you have not looked at your portfolio holdings in a while make sure you do. Look at the breakdown and ensure you still have a balance to include some growth producing securities (as long as it is within your risk tolerance). There is still a long horizon to ride the investment wave, not just realizing accumulation, but also recovering from a downturn. On that same note, ensure you are diversified to mitigate the risk of being too over concentrated in any one area. This is a great time to touch base with your investment advisor so you are both on the same page.

  • What You May Need: Curious how much income you may want to replace in retirement? Each person is different but the general rule is to have enough savings to replace 70% of your pre-retirement income.

  • What You Should Watch Out For: Do not succumb to lifestyle creep. Over the years, you have likely had your income steadily increase. With that people often increase their non-needed spending as well, and sometimes not in toe with the increase in income. Keep an eye on this and intentionally set up monthly contributions to an investment account if possible to realize some growth to supplement that retirement income.

  • What You Should Plan For: If long-term care insurance will be desired and/or needed, begin to do some shopping. Often people wait too long to purchase long-term care insurance and by that time the cost may outweigh the benefit (or may not be possible to budget appropriately for).

  • What You Should Consider: Looking at a relocation, home sale and downsize, or something similar? There are a lot of 55 and older communities and CCRCs (Continuing Care Retirement Communities) that are quite appealing. Some even allow you to buy in for a premium under a certain age, which may still make sense. People often buy into these far too late to get their maximum benefit, so if this is an avenue you are looking at it is never too early to begin window shopping.

As always, our team is here to help as you plan your financial future. Please feel free to reach out as you approach any significant milestone in your life.

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The opinions expressed and material provided are for general information only.

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