While it is ideal to start planning for retirement early on in your career, many Americans do not actually follow through with this. One study by the Insurance Retirement Institute reveals that a full 45 percent of baby boomers have no money saved for retirement and 44 percent of them are in debt. The good news, however, is that even if you are in your 50s, you still have time to get your retirement plan in shape. Here are four tips from Freedom Financial that you can start right now. After all, you still have a good 10 to 15 years to prepare.
Take Advantage of Retirement Contributions
The older you get, the more you can put aside in retirement accounts. If you are currently behind on your savings, now is the time to take full advantage of these additional contributions. If you work for a company that offers a matching program for your 401k, utilize it to its fullest advantage. According to Freedom Financial, this is an easy way to put extra money towards your retirement.
Additionally, after age 50, you are eligible to add an extra $6,000 to your 401K each year. Plus you can increase your yearly IRA or Roth IRA contributions by $1,000. At age 55, you can add another $1,000 to your health savings account. By taking full advantage of each of these savings, you can really ramp up your retirement money, even in your 50s.
Evaluate Your Investment Portfolio
If you currently have money in an investment account and have for a while, then you know how volatile the market can be. While it may be a smart move to diversify and include some higher risk investments when you are young, this is not such a good idea as you near retirement. Sometimes the market delivers great returns, and sometimes it doesn’t.
And time is not on your side with the market as you get older. If the market suffers a crash, the chance of your portfolio recovering is less than it would be if you were younger. Freedom Financial recommends that you look for investment opportunities with bonds, CDs, annuities, and other options that pose less of a risk than stocks.
Get Rid of Unnecessary Insurance Policies
When you are young and have a family, an insurance policy can protect your loved ones in the event that something happens to you. And it is smart to have one of these in place, especially if your spouse and children depend on your income. However, as you grow older, this policy may not be as critical.
Often times in your 50s, your life circumstances have changed. Your children may be grown and financially independent. If you are married, your spouse may have a career and income. So, if there is no one dependent on yours, then the money you are paying towards an insurance policy may be better served elsewhere. Freedom Financial suggests that you use this money to maximize your retirement contributions or pay down any burdensome debt.
Eliminate Your Debt
It is very difficult to retire if you are still carrying debt. In fact, you may find yourself working well into your retirement years if you are still paying on credit cards, loans, and other forms of debt. So, evaluate your financial status and make it a goal to eliminate your debt well before you reach the age of retirement. Even if you are in your 50s, this is still achievable.
Freedom Financial offers a variety of programs that could help you eliminate your debt so that you can focus on your retirement goals. With certified debt counselors and a program customized to your specific situation, you could put your debt behind you and focus on all the different ways to enjoy your retirement. After all, you’ve worked hard to earn it.
Ready to get started? Contact us for your free evaluation today.