While you have happily reached your 50s and made enough arrangements to secure a safe future for your family, you may still have several responsibilities to deal with. When it comes to financial responsibilities, the load is at its peak at this particular stage of life. You might be paying a hefty fee for your children’s college expenses or have a home loan to settle. All these events require a huge amount of money and may put a lot of pressure on you. However, if you have a decent financial plan in place, you are sure to manage these life events without dipping into your retirement savings. Following some fundamental financial tips from industry experts can also be of great help while planning this phase of your life.
Here are the 5 most important financial tips to sail smoothly through your 50s:
Now that you have attained your 50s badge, it is imperative for you to prepare well for your future years. Now is the time to channelize your income sources towards paying off your debt, so that you do not need to dig into your savings later. You must also understand that now you are left with a limited number of years to earn a salary. Approximately 8 to 10 years down the line, you will retire from your current job and may not have any source of income. You will have to rely on your savings for all your major and minor expenses. However, if you still have a loan over your head, your savings may exhaust sooner than you think. You may end up using a substantial portion of your retirement funds to clear off credit card or loan interests.
Most people in this age group also carry the burden of their children’s education loans on them. If you have guaranteed a student loan and your child has graduated, you can seek a transfer of ownership from the loan. The student loan can be completely transferred to the child if they have started earning. You can also opt to share the loan amount with the child and share equal responsibility. This will considerably reduce your debt liability.
The next step is to secure your retirement financially. This would require you to thoroughly gauge the probable expenses you will incur post retirement. You also need to think about the possible sources of income in your retirement and the number of people likely to be dependent on you then. This will include factoring in costs like medical care, rent, groceries, etc., that are going to increase with age.
Investing in instruments that can serve as both investments and insurance can be one to secure your future. You also need to revisit your estate plan to make any necessary and desired changes.
50s is a time that can bring a lot of unexpected expenditures. You may start your own business after retiring from a 9 to 5 job, travel, or go ahead with the long due home renovation plans. All these events are expensive to fund and require a lot of planning and budgetary adjustments. You would not want to take a dig into your retirement funds to cater to the financial needs of such events. Hence, it is important to have a separate pool of savings that can help to cover these expenses. You can start dedicating a portion of your earnings towards these costs from an early age and use the same when the time comes without raiding your retirement funds.
This is one crucial aspect that people generally forget about. There are several benefits of having a life insurance or health insurance policy. These include securing the future of your nominees, covering medical costs, and providing increased liquidity in tough times. You can also explore the option of long-term care insurance as you attain the age of 50. Though long-term care insurance is quite expensive, it is a great cover to take care of your growing medical needs as you age. When it comes to insurance, the sooner you invest in a good plan, the better it is. As you grow old, the premiums of your insurance plan are likely to get more expensive, so buy one as early in life as you can.
A health savings account (HSA) is another great option that offers tax advantages and provides coverage over medical expenses.
Lastly, but most importantly, you need to evaluate your situation and revisit your lost interests and hobbies while you are nearing your retirement but still have ample time to prepare for it. Whether it is your interest in opening a side business or a lost hobby that you want to take up full time, look out for something that can easily convert into an income source post-retirement. One thing to keep in mind while doing so is to make sure that you go for a low-stress option as you would not want your post-retirement career to affect your mental and physical health.
With all these points in check, your transition from a senior professional in their 50s to a post retirement hobby enthusiast can be a smooth one. Planning for major expenses ahead of time and securing your financial future can empower you to live independently and debt-free. While you are still in your 50s and planning for a financially stable life ahead, seeking advice from Financial Advisor can also help. This will keep your plans under check as you leverage their guidance from time to time.
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