Retirement planning in your 50's

3 Retirement Planning Tasks for Your 50s

Did you just turn 50? Is retirement on the horizon? If so, you may already be dreaming about your future life after you leave the working world. While it may be easy to plan vacations and think about your free time after you retire, this is also a great time to take final retirement planning steps and solidify your financial footing.

Below are a few action items to consider as you approach retirement. If you haven’t developed a retirement strategy, now may be the time to do so. A financial professional can help you fill the gaps in your planning so you can enter retirement with confidence.

Make catch-up contributions to your qualified accounts.

Many people use qualified accounts such as IRAs or 401(k) plans to save for retirement. These accounts are popular because of their favorable tax treatment. They offer tax-deferred growth, which means you don’t pay taxes on gains as long as the funds stay in the account.

These accounts have contribution limits each year. Once you turn 50, however, you can increase your contributions above the standard limitations. That’s because those age 50 and up can take advantage of something known as catch-up contributions.

In 2019 your 401(k) has a standard contribution limit of $19,000. If you’re age 50 or older, however, you can contribute an additional $6,000 in catch-up contributions, giving you a total allowable contribution of $25,000. Similarly, you can contribute as much as $6,000 to an IRA, with an extra $1,000 in catch-up contributions available for those 50 and older.1

You may feel like there’s no room in your budget to make additional retirement contributions. However, these final years of your career could be your last chance to accumulate assets. Look for areas to cut back so you can take advantage of the opportunity.

Consider purchasing long-term care insurance.

Long-term care is likely to be a reality for many retirees. The U.S. Department of Health and Human Services estimates that 70 percent of today’s 65-year-olds will need long-term care at some point in their lives.2

Long-term care is extended assistance with basic living activities such as bathing, eating and mobility. It’s usually provided in a facility but can also be provided in the home. As you may know, long-term care is sometimes needed for years and can cost thousands of dollars per month.

Unfortunately, most long-term care services aren’t covered by Medicare. That means you may have to pay for the costs with your own assets. You may want to consider long-term care insurance. You pay a monthly premium and, in return, the insurance company covers some or all of your long-term care costs. Most policies even cover care provided in the home.

Look for opportunities to create guaranteed* income.

Guaranteed income is a helpful resource in retirement because it provides you with a base level of certainty. You know you’ll receive this income for life, no matter how the financial markets perform. You’ll receive some level of guaranteed income from Social Security and may also receive income from a pension.

You can create additional sources of guaranteed income with your personal savings. Annuities are often an effective strategy. Many annuities offer various ways in which you can convert a portion of your savings into a guaranteed lifetime income stream. For example, a single premium annuity lets you create a guaranteed stream of income based on your life expectancy.

Ready to finalize your retirement strategy? Let’s talk about it! Contact us today for a FREE retirement planning strategy session. We can help you analyze your needs and develop a strategy that works for you.

 

Sources:

1https://www.forbes.com/sites/ashleaebeling/2017/10/19/irs-announces-2018-retirement-plan-contribution-limits-for-401ks-and-more/#20b6990a25ac

2 https://longtermcare.acl.gov/the-basics/how-much-care-will-you-need.html

*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.

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This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

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