Retirement Planning in Your 50s

Retirement Planning in Your 50s

As you reach the peak of your career and get closer to retirement in Denver, planning strategies shift. You’ve worked with your retirement income planning advisor over the years, but things change. Your income is higher than it was in your 30s and 40s, you have experience in your field. Your children may be off to college, and you have a lot more expenses.

Think back to 10 or 15 years ago. It seems like only yesterday. And 10 to 15 years in the future retirement will be close, so it’s time to look at maxing out contributions while resisting the temptation to make withdrawals.

How Much Do You Need for Your Retirement?

We live in uncertain times, but there are ways to know if you are on the right track, or if you should shift your saving strategies. A general recommendation is to put aside between 15% and 20% toward your retirement. But a general recommendation doesn’t suit every situation.

Carefully consider the lifestyle you want to live when you are retired and make some potential expense calculations.

Compare those retirement dreams against your savings plan.

The goal is usually to accumulate savings to replace between 70% and 80% of your working income. This includes your Social Security. Of course, that depends on how and where you want to live. Retiring in Denver could be more expensive than other locations. So, it is in your 50s that making changes to your retirement strategy sets you up to reach your goal.

Check your investment portfolio. Reassess your retirement contribution allocations. Increase contribution amounts. Establish a 401(k) or similar account if your employer offers it. And as every year passes, you get closer to retirement, so your investments should get more conservative.

Retirement Planning Once You Turn 50

Retirement planning is different in your 50s, so here are some more issues to consider.

  • Catch-Up Contributions – Once you complete your dream retirement expenses to your savings, you may find you are a bit behind. The special provisions for those over 50 make it possible to catch-up on making extra contributions. Fund your IRA or make higher salary deferral contributions to your 401(k), 403(b) and/or 457 plans.
  • Resist the Temptation to Withdraw Savings – Things come up, and it can be hard to resist, but while you are working, your income pays the bills. Once you retire, you will need those savings. Social Security only replaces a fraction of your working pay. Plus, with the 20% IRS tax withholding, and potential 10% withdrawal penalties if you are not 59 ½ yet, ask yourself if the withdrawal is worth it. If so, take the absolute minimum, not your entire account balance.
  • Start Estate Planning – Now is the time to designate beneficiaries, create a comprehensive will and start your estate planning. Legally ensure all your wishes are honored when you die or if you become incapacitated. Look at long-term care (LTC) insurance options. This helps prevent your retirement savings paying expenses from a long-term illness, rather than financing your retirement plans.
  • Spousal Income – Consider a Spousal IRA if one of you has little or no working income. Boost the overall retirement savings for the two of you, so you can retire together more comfortably.

The Bottom Line

Once you turn 50, retirement looms large on the horizon. In your 50s, is the time to rethink your strategies and focus in on your retirement savings plans. Your retirement income planning advisor in Denver can help you analyze and adjust your strategies.