Typically, by the time we reach 50, we can take a big sigh of relief. We have finished classes, are well-settled in our careers, earning a pretty good income and our children are well on their way. But, as we approach this defining milestone, there is still much to do to safeguard our money and ensure a solid financial footing as we enter our retirement years. Here is some advice from the experts:
Think that the now that the kids are out of the house, you can redesign the space into that long-awaited private library, home office or spa? Not so fast. You may have to redesign that space to provide private housing for your children. According to a Pew Research Center report from the summer of 2014, 18.1% of Americans were living in multi-generational households in 2012, twice the number reported in 1980. Young adults between the ages of 25 to 34 make up the greater proportion of those living in multi-generational homes. So, instead of that special spa retreat in the basement, you may need to head to an alternative market lending source for a home improvement loan to build a home within your home for your adult child. Alternatively, you can also use a home improvement loan to make more space for your future grandchildren when they come and visit!
Long-Term Care Insurance
No one wants to contemplate the possibility of a long-term health crisis, especially at 50 when we are still feeling full of vitality. But, this is an excellent time to prepare for that eventuality. Long-term care insurance covers the costs of nursing home care or an in-home caretaker. Since the cost increases according to your age, it is better to purchase now. For instance, the American Association for Long-Term Care Insurance says that the average price for a policy, if taken out at age 55 is $2,466 per year for a couple, vs. $3,381 per couple if taken out at age 60. Also, there are certain pre-existing conditions that make it impossible to obtain long-term care insurance, so it is wise to enroll now while you are still in good health.
Clean Out the Debt So You Can Focus on Retirement Savings
Hopefully by the time you reach your 50’s, you have paid off your student loans, credit card debts, consumer loans, maybe even the mortgage. If not, make it a priority to eliminate that debt as quickly as possible. The interest rates and fees will keep you trapped in a money drain that severely diminishes the amount of cash available to fund your retirement accounts. If you are still awash in debt, especially in credit card and other consumer debt, there are a number of debt consolidation options, including p2p lenders who will help you to free yourself from the debt trap.
It is Not too Late to Beef Up Your Retirement Savings
It is of course best to begin saving for your retirement from the moment you launch your career, but the past decade particularly has not been an easy one for most Americans. The good news is that there are favorable tax laws that allow you to catch up on your retirement savings. For instance, once you are 50 and older, you can save an additional $1,000 in a Roth or regular IRA above what you were allowed when you were younger. Also, once you are 50 and older, you can increase the annual amount you put into a 401(k) or similar retirement plan by $5,500.
Retirement is your time of financial independence. With careful planning, self-analysis and aggressive steps to prepare for the future, you should be able to enter your golden years stress and debt free.