Ah, the crazy 50s! No, I’m not calling this decade that because every night is a party, even though by this time you very little financial liabilities to worry about after paying off your credit card debt and home loan.
Well… maybe if you struck it rich with some fantastic investments, business ventures or invention – then every night is a party.
Anyway, I’m calling it the “crazy” 50s because you’ll literally be driven crazy by the amount of financial distractions you’ll have to deal with ranging from constant investment pitches to your kids/relatives/friends asking for money.
With the exception of taking care of your ageing parents, every available dollar you have should go towards your retirement… although some splurging can certainly take place as long as it doesn’t mess with your retirement goal(s).
Without further ado, here are the 3 biggest financial objectives you should aim for in your crazy 50s:
#1 Continue to Adjust Your Savings and Investment Portfolio to Reach Your Retirement Goal
Remember our article on the 3 biggest financial objectives you should aim for in your 40s? Well like objective #2 in that article, you should continue to take a more “hands on” approach to monitoring your investment portfolio so that you’re on the right track towards retirement.
In your 50s, it’s wise to adjust your savings and investment portfolio to reflect a more “cautious” approach to investing that’s less growth focussed. That means becoming more conservative on your investments by relying less on stocks and more on bonds and cash savings.
Of course, you shouldn’t just play it super conservative and keep your stocks to just a small percentage of your portfolio – it still needs to keep growing after all! Depending on your risk appetite, you might keep 30% to 50%+ of your portfolio in stocks.
Never completely remove stocks from your portfolio because you want to play it safe – a portfolio that has low growth is much safer, but it also makes it more likely that you’ll outlive your savings.
And one last thing – make sure that you adjust your emergency savings fund during your 50s as well. You never knew if your employer might retrench you as an early “retirement” gift.
So just in case that does happen, make sure you have an emergency savings fund of at least 24 months – that way you don’t have to do sell anything that you might regret later (ex. Property, stocks, etc.).
#2 Take Care of Yourself Before Taking Care of Others (Yes That Means Your Kids!)
It’s true you know – you can’t help anyone else until you help yourself. You see examples of that reality in many places such as when you go on a flight and the flight attendant goes through the safety briefing explaining that you must put your own oxygen mask on before you can help your kid with his/hers.
Most of us learned the same lesson in the military too – in case of a chemical attack, you must put your own mask and suit on before you even think about helping any of your buddies.
The rationale behind that line of thinking is simple – to help others, you need to have the means to help yourself first.
Look, I know it’s not easy to have to tell your kids that you can’t help them with their home loan, car or credit card payments. It’s a crappy situation, but here’s the reality – your kids still have another 30+ working years left in life. You on the other hand have 10 to 15 – that’s it.
You really have to take care of yourself first and make sure you on track to reach your retirement goal(s).
So instead of putting your retirement on the line by giving your children thousands, work with your children and teach them the following important financial lessons instead:
- How to create a budget
- How to stop overspending
- How to successfully pay down debt
- How to eliminate credit card debt quickly
#3 Keep an Eye on Your Insurance Policies and Estate Planning
You should be evaluating your insurance policies each year just to ensure you’re protected against the unexpected. After all, there’s nothing worse that realising too late that you should have purchased better coverage after an unfortunate event occurs.
In your 50s, making policy adjustments can be expensive, but it’s nowhere near as expensive as making the same adjustments in your 60s, especially when it comes to long-term care insurance.
The best way to see if such policy additions/adjustments will be worth the expense is to evaluate the cost of being without such a policy, the cost of the policy and your financial capacity for dealing with both situations. Also, it doesn’t help to compare insurers to see which offers better premiums.
Hopefully during your retirement planning in an earlier decade (your 30s or 40s would have been nice), you didn’t forget to start your estate planning – yes, that means creating your last will and testament so you can establish who gets what in the event you have to take a… permanent vacation.
If you haven’t gone through your estate planning, now is definitely the time to do it! For a little more info on what’s involved, you should check out our article “Get Financial Peace of Mind with This One Activity“.
Final Note: If you’re looking for a quick and simple way to “chart” the most important objectives you much achieve during the difference phases of your life, check out our infographic on the 4 Financial Life Phases.
How many of these objectives were you able to reach in your 50s (or better yet, how do you plan on achieving these objectives when you turn 50)? Share your insights with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!
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