Financial Advice For Every Decade:
Steps To Take As A 50-Something
Age is relative, or so they say. You might begin to wonder, or at least I do, is this halftime of a great game or is time running out on the field? You have been through your fair share of life’s ups and downs at this point, and there is a light at the end of the tunnel. By effectively handling all of life’s curve balls, you now carry the wisdom of 50 (or more) years with you everywhere you go.
Some of your wisdom falls into the category of financial management. Your financial history is long and well developed now. You have made a countless number of decisions about your financial situation over the years. Because of this, you have developed habits that have put you in the place where you stand today. The next steps depend on you applying the discipline and prudent practices that got you to this point.
1 – ELIMINATE ALL DEBT
Debt should be eliminated by now if at all possible. Taking on large, new debt should be avoided in nearly, if not all circumstances. Now that your children are grown and gone, you will have more money in your pocket at the end of each month. It probably feels like you got a raise! It might be tempting to take this “new” income to significantly upgrade your home or purchase some other item that will make you feel young and free, but don’t use debt to finance purchases of this sort.
Since you are getting so close to retirement, debt is a ball and chain you should avoid at all costs. Struggling with debt can be difficult and tiresome at any age. This close to retirement though, debt will be emotionally and financially draining.
Debt is your enemy because it will keep you from continuing to build wealth, and at this stage of our lives wealth building should be our priority.
2 – MANAGE LIFE INSURANCE
Life insurance is an important topic and building block of a successful financial plan, particularly when there are children to raise and mortgage payments in the picture. Ultimately though, your life insurance was for those who depended on you for support. If you no longer support those people or those people are able to support themselves, you should evaluate if you will receive enough benefit from a product that can be incredibly expensive as we advance in years.
All circumstances are unique, but resources allocated to life insurance in earlier years can sometimes be used more effectively later in life. Life insurance will undoubtedly be more expensive at this stage of life than it was when you purchased your first policy years ago. Don’t mindlessly jump into any decision about life insurance at this point. Take the time to carefully consider the costs and benefits of this decision.
No matter the size of the financial issue, always feel free to discuss the topic with your financial advisor. With a decision of this significance, they will be happy to provide additional advice and guidance.
3 – EXAMINE LONG-TERM CARE INSURANCE
The majority of people will need long-term care or support at some point. Studies show that somewhere in our late 50’s can be an optimal time to begin coverage, so stay ahead of the curve by looking into long term care insurance options now.
It may be difficult to convince yourself that long-term care insurance is worthwhile, but it is incredibly difficult to fund an assisted living facility or nursing home requirement on top of other medical expenses without the additional help of long term care insurance. At an average rate of $4,000 a month, the extra care that you might need as you age can be costly. It won’t be any less expensive in future years either! This type of added expense would quickly eat into your retirement fund and income, especially if you are required to stay for an extended period of time.
4 – PRIORITIZE RETIREMENT PLANNING
The day that we have been waiting for is almost here! Retirement planning should be our top priority now. Review the goals that were established in previous decades, and how you stand relative to those goals. Will you have enough funds to retire comfortably and without worry? This will depend greatly on how your lifestyle changes once you retire. Regardless, if you touch base with your financial advisor now, they will be able to tell you if you are on track.
Because you are in such an important time period financially, it may be prudent to meet with your financial advisor more frequently. Any time that you have a question or concern about retirement, you should contact your advisor for guidance. It is always an acceptable time to reach out to your financial advisor because they will want to help minimize and eliminate your concerns.
If you are behind on reaching your goals, you should know that it is not too late, but it certainly is no longer early! Maximize the contributions to your retirement fund across the board. This will be an essential step to take in the next few years, accelerating (or catching up) the process of fully funding your retirement.
5 – VISUALIZE DESIRED RETIREMENT OUTCOMES
Visualizing what our retirement may look like becomes important. For some, retirement is a line in the sand. They will stop working and look for other things to do with their time. For others, it can be a gentle transition from one occupation to another, less demanding line of work. Retirement is quickly approaching! It is important that you have a general grasp of what you will be doing once you retire.
What do you see the next 30 years of your life looking like? Do you want to work part time at another job? Travel the world? What will you do with all that free time? There are a countless number of things to do once you retire, but this is a list to get you started. Studies show that what we think we may enjoy does not always hold true. It can make sense to have a dress rehearsal to see what activities may hold our interest.
Your vision of an ideal retirement will make you happy and fill you with anticipation. The more vivid the picture in your mind of what retirement will look and feel like, the more motivated you will be to push yourself to reach your goals.
6 – ALLOW CHILDREN TO BECOME COMPLETELY FINANCIALLY INDEPENDENT
Assuming we have done a good job, our children are now at a stage where all parties are best served if we no longer cover their phone bills, car payments, emergencies, etc. You likely remember what this process felt like when you were younger. Remembering back, you likely went through this yourself, and it may not have been fun at the time. Despite this, your parents gave you the opportunity to grow and thrive independently.
You should do the same for your children. Your children’s financial dependence will negatively impact both you and them (6). The “Bank of Dad and Mom” is closed, so instead of subsidizing their financial well-being, offer to help in other ways. Give them advice, care for them emotionally, and support their endeavors but avoid direct financial aid as your children become independent adults.
The love and respect will remain in place. Their success and ours will be stronger if they build their own future from here.
7 – LOOK OUT FOR OUR PARENTS
The timing for this part of our lives is nearly perfect. As our children become independent of us, our own parents suddenly require extra attention and care.
This could take shape in a variety of different ways. Perhaps this could involve driving them to appointments or moving them into a home without stairs. Perhaps it will start with handling some of their day to day activities. Many elderly folks struggle with loneliness or boredom and you are no longer just their children, but one of their core social outlets. There is nothing that they will love more than to regularly see you and their grandchildren.
There are many things that you can do to help your parents but simply keeping in touch with them will be one of the most beneficial for them. Call them regularly and make sure they know what is happening with you and the rest of your family. They will enjoy hearing the updates and will be grateful that you called.
8 – START SHARING YOUR VALUES WITH KIDS AND GRANDKIDS
You have spent the last 50 years acquiring many life lessons and tidbits of useful knowledge. We have all made some mistakes through the years, but each moment served as a helpful learning opportunity. Instead of letting your family repeat these same errors, share your experience with them. They’re lucky to have a person as wise as you around, don’t let them get by without hearing what you have to say.
You have the chance to leave a significant and lasting legacy. Now becomes the time to pass the torch to those coming up behind you. You may not have had discussions like this in the past, but now is the time to have serious conversations with those around you about your values. If you model the desired character with your own actions and behavior as well as having these intentional conversations, your family will continue to make you proud with the character they exhibit.
This process won’t be easy, but it is vitally important. Your impact in this area will be long-lasting and uniquely special if you take the time and make the effort to share yourself with those around you.
ALL THAT TO SAY
We are headed into one of the most enjoyable times of life, so make sure to treasure these moments.
– Jon Timson