Do what you do in your 50's to prepare for retirement safely – Motley's Fool


Your 50 years are a turning point on the road to retirement. It is likely that you will earn more money in your fifties than before in your career, which means that you will have greater financial flexibility than ever before. On the other hand, you may have more expenses to make, such as tuition fees for your children. However, if you want to retire comfortably, you will need to spend your 50s achieving goals that can help you achieve your goals. Here are some to target.

1. Build a full emergency fund

Without a solid level of savings, you risk getting into debt the next time an unexpected expense occurs. And incurring debts in the years leading up to retirement increases your risk of carrying this financial burden in your golden years and struggling to get it. A better bet? Create a healthy emergency fund – ideally with a sufficient fund to cover your living expenses up to six months. This will help you avoid debt if you lose your job, if you have problems repairing your home or if you end up with exceptionally high medical bills.

Middle aged man sitting on stairs wearing a gray sweatshirt on a yellow t-shirt

Source of the image: Getty Images.

2. Boost your nest egg

Once you turn 50, you'll have a great opportunity to catch up on retirement savings. In fact, IRA and 401 (k) contribution limits are higher for workers aged 50 and over. Currently, you can pay up to $ 7,000 a year for the first and $ 25,000 a year for the latter. Capitalizing on catch-up contributions can increase your savings significantly. If you are 57 today and you want to retire at age 67, reserving $ 25,000 a year by then will leave you $ 345,000 more, as your investments generate a return. annual average of 7% during this period. Even if you can not reach the maximum of 401 (k), try to increase your contributions to your pension plan during your 50s to earn additional income once your golden years have passed.

3. finance a health savings account

Health care is one of the biggest expenses of retirees. That's why it makes sense to contribute to a health savings account, or HSA, during your 50s. The money you pay (tax free) can be invested in a way to make a larger sum. If you use this money for eligible medical expenses, you can make tax-free withdrawals. To be eligible for an HSA, you must be enrolled in a high deductible health insurance plan (ie an annual deductible of $ 1,350 or more for individual coverage and $ 2,700 for coverage family). You can pay up to $ 3,500 to an HSA as an individual this year or up to $ 7,000 for a family. If you are 55 or older, you receive a $ 1,000 catch-up contribution.

4. Pay off your mortgage

In health care, housing is another expense that absorbs a large portion of retiree income. Therefore, if you are able to pay off your mortgage on time for your retirement years, you will have a monthly bill of less to worry about. A relatively easy way to reduce your mortgage is to take your monthly payment, split it in half and pay that amount every two weeks. In doing so, you will make an additional mortgage payment each year. Support this practice throughout your 50s, and there is a good chance that you will have no housing debt until the end of your career.

5. Buy long term care insurance

It is estimated that 70% of people aged 65 and over end up needing some form of long term care. And without insurance, the costs can be astronomical – think an average of $ 48,000 a year to live in assisted living, and about $ 90,000 to $ 100,000 a year on average for nursing home care, room. Without long-term care insurance, you will be the only one to cover these costs because Medicare will not pay the price. Therefore, rather than run this risk, apply yourself. The best time to do it is your beginning from mid-fifties. At this point, you do not pay the premiums too early, but you are also more likely to block a favorable premium rate based on your age and health. The cost of your policy will depend on a number of factors, such as the amount of coverage you want to get, so compare the prices and see what options are available to you.

Although your fifties are the time to continue to focus on your career, it is also the time to think seriously about your golden age. Make these smart moves and set the stage for a financially secure retirement.

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