Age 50 to 60 is crunch time for your upcoming retirement. That means doing everything you can to ensure a financially stable future that gives you the flexibility to travel, pay for increasing medical bills, everyday expenses, home repairs, and more.
As you get closer and closer to retirement, it’s important to review your financial snapshot to ensure you’re on the right track and can maximize your efforts over the next decade. Whether that means making additional contributions, estate planning, or rethinking your investment strategy, it’s important to keep a close eye on your accounts.
Read below to learn how to prepare for your upcoming retirement.
Evaluate Accounts and Set Goals
The first and most important step is evaluating your current financial snapshot. Consider the following in your review:
- What are your retirement fund totals?
- Do you have conservative or risky investments or a mix of both?
- Have you maximized your contributions in your 401(k) and/or IRA?
- Do you have room in your budget to increase your annual retirement contributions?
Your answers to the questions above will help you find gaps and areas of improvement in your current strategy. Maybe you need to meet with a financial advisor to change your strategy from a risky approach to a conservative one, or maybe you need to review your budget and make room for more retirement contributions. Regardless of where you start, every adjustment gets you one step closer to a financially-free retirement.
Slavic401k has calculators you can use to determine which adjustments you should make. Calculators such as the retirement planner calculator will help you understand what it will take to secure a good retirement fund, while the retirement nest egg calculator will help you determine how much you need. View a full library of calculators here to learn more.
In addition, you can also use financial apps to track your budget and investments, such as Mint or Spendee. These apps provide a snapshot at your fingertips and can help you track retirement goals, income and expenses, investment earnings and losses, and more. Understanding where you are financially at any given moment will also help you adapt to change and pivot where needed. Make sure you speak with a financial advisor as well to ensure you’re on the right track and have your money in the right places.
It’s normal to accrue some good and bad debt throughout your lifetime. Good debt means that it enhances your finances or life, such as purchasing a home or starting a business; and bad debt refers to credit cards or personal loans that may finance a shopping spree or vacation, but don’t add intrinsic value to your financial snapshot.
Whether you have good debt, bad debt, or both, as you enter the decade leading up to retirement, it’s important to focus on paying off the balances so you don’t have to worry about them in your golden years.
Start by organizing your debts, noting interest rates and totals to be paid. From there, you can find areas in your budget where you may be able to make adjustments so you can make extra credit card or mortgage payments.
If you have multiple sources of debt, you may want to explore consolidating them. Balance transfer credit cards and debt consolidation loans can help you track your debt in one place by making overarching payments and may help you stay on track with a pay-off strategy. Utilizing the snowball method may be another way to keep you accountable. The snowball method involves paying off the highest debt first, then the second, and so on, until you’ve eliminated all of your debt. Both of these strategies can significantly help, especially with multiple sources of debt to track as you enter retirement. Learn more about managing debt and Learn more about managing debt on the Slavic401k blog.
Another way to prepare for retirement in your 50s and 60s is by estate planning. Throughout your life, it’s likely that you acquired valuable assets, such as home, retirement savings, artwork or jewelry, vehicles, and more, and each item will need a plan for when you’re gone. Estate planning helps you designate beneficiaries and set guidelines for your next-of-kin to handle.
Nerdwallet has a helpful seven-step guide that lists the details to start planning your estate, ranging from listing your asset inventory to reviewing beneficiaries and establishing directives. Remember, a well-planned estate will minimize stress and financial burden on your beneficiaries, so taking the time to review it now is crucial.
To learn how estate planning can impact retirement savings, read the Slavic401k blog here.
Sign Up for Medicare
As you age, medical-related expenses continue to rise. While it’s a good strategy to have funds in your retirement account to help you offset those future expenses, it’s also a good idea to consider enrolling in Medicare, a government health insurance program for individuals over the age of 65.
Coverage is divided into plan options A, B, C, and D, and includes hospital insurance, long- and short-term care, office visits, medical equipment, and more. To learn about the ins and outs of healthcare planning in retirement, read the Slavic401k blog here or visit medicare.gov.
Open an IRA
An IRA can be a great supplemental retirement account to help you maximize your efforts. These accounts are individually owned and managed by the participant and operate outside of a company 401(k) plan. That means that you can decide how much is contributed to the account and when, as well as which investments you’d like to invest in.
In 2023, IRA participants can contribute $6,000 annually, or $7,000 if over the age of 50. Contributing the maximum amount possible can help you make leaps in your retirement savings over time.
When considering an IRA, there are two different accounts to take into consideration. Traditional IRAs allow participants to make contributions with pre-tax dollars, which makes them fully or partially deductible on a tax return, whereas
Roth IRAs provide tax-free growth through retirement because contributions are made with after-tax dollars. The ins and outs of each account operate similarly but are different enough that you’ll want to review them to decide which one best fits your financial plan and budget. Learn about the differences on the Slavic401k blog and speak with a financial advisor if you need to discuss more before making a decision.
Utilize Catch-Up Contributions
Another strategy to help you prepare for retirement is to utilize catch-up contributions. These contributions are offered to IRA and 401(k) participants over the age of 50.
In 2023, 401(k) plan participants can deposit an additional $7,500 to their plans, and IRA participants can contribute an additional $1,000. The maximum changes each year, so make sure you check the IRS website annually to ensure you’re getting the most out of your investments.
These small changes can add up to big differences over the decade leading up to your retirement, so make sure you’re utilizing them if your budget allows. To learn more about catch-up contribution eligibility, visit the IRS website.
Preparing for retirement should be an exciting time, and with the proper retirement strategy in place, it will be. Walk through your options, review your finances frequently, and make changes to your budget or investment plan as needed. You’re getting closer to your golden years, and with endless free time and room for enjoyment, your budget should match the lifestyle you’ve envisioned and worked so hard for.