Financial Goals Over 50 Explained with No Grey
When you reach 50, you are getting pretty close to retiring. It's time to start making sure that you can retire well and enjoy life when the time comes.
If you have not done so yet, you should take some time to think about what you want retirement to look like. Let yourself dream, and then make a plan to live out that dream. The information below includes several financial goals over 50 to help you do so.
Honest Assessment
First, you need to take the time to do a full assessment of your current financial picture, leaving no stone left unturned. You can do this by answering the following questions:
If you were to retire today:
Would you be able to live out your dream?
How long could you live off of what you have?
Are your debts paid? If not, how much do you owe?
How well would your loved ones be taken care of? Would they have to pay the rest of your debt and funeral costs when you pass on or do you have that handled?
These questions will help you start diving in and analyzing your current situation, but don't stop there. You need to look at everything and be completely honest with yourself.
And, please, do not count any social security in. We truthfully don't know what will happen with that or if it will still be around. And even if it is, it is not enough to retire on. It is okay as supplemental income, but it should not be relied on to fund your retirement.
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Invest
Being risky with investments is okay when you have plenty of time left to replace any money lost. However, the closer you get to retirement, the safer you should be. This is not to say you cannot take any risks- just be more careful.
It's a good idea to work with a financial planner. They can help you balance your portfolio with retirement in mind.
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Get Out of Debt
Getting out of debt is incredibly crucial at this point. If you do not and you have too much of it, you may not be able to retire. You might have to keep working just to pay off that debt. Instead, try to put the following information to work for you.
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Mortgages
If it is at all possible, get your mortgage paid off early in your 50s. I know this might sound impossible, especially since average mortgage balances range between $200,000 and $416,000. That's a big chunk of change to come up with all at once, but there are a few ways to make a big difference in that balance.
1. Pay bi-weekly to make one full extra payment per year. Let's say your monthly payment amount is $500. Instead of paying the full $500 once a month, pay $250 every two weeks. Doing so means you are making 26 payments of $250, totaling $6,500 per year. By paying $500 once per month, you are only paying $6,000 per year.
If that does not seem like a big deal, you need to understand how your mortgage works a little better. Everything extra you pay comes off of your principal balance. The lower your principal balance, the lower the amount of interest you pay, meaning more of each payment goes to your principal. It creates a domino effect that can help you pay your mortgage much more quickly.
Also, though it's only $500 a year, it adds up to $5,000 over a decade. Trust me, it helps.
2. Pay more than your monthly mortgage balance. Whether you follow the first step here or not, this one can help. Every time you make a payment, put in something extra. It doesn't matter if it is only $20 each month- it still decreases the amount of interest you pay. If you can combine the bi-weekly payment method with this step, you will see a big difference over time.
3. This last idea is a bigger step, but it can also reap more significant rewards. Consider refinancing your home for a lower interest rate and preferably a shorter repayment term. A 15-year mortgage costs much less in interest than a 30-year mortgage.
Student Loans
I can tell you right now that student loans are a headache for most people. Americans are in a total of more than $1.6 trillion in student loan debt- quite a lot of money. And most people are still paying those loans for decades later.
Considering I am among those people, I don't really have any magical tips to get you out of student loan debt. However, you can follow the same principle of paying any extra you can with each payment to knock the total you owe down.
Credit Cards
Credit cards are another common American debt. In fact, that debt adds up to almost $600 billion dollars. And it is not something you still want to owe when it's time to retire.
If at all possible, pay your credit cards completely off all at once. You might be able to do this with your tax return or something similar. If you cannot do it all at once, at least pay more than the minimum balance every month and try to stop using them at all.
Declutter Your Home
I realize that this might sound like a really odd thing to have on the financial goals over 50 list, but it is relevant. Let's address a few facts to make it clear how.
1. Your stuff takes up space. The more space you need, the more money you need to pay for that space. If you are paying out a lot of money for a mortgage on a big house or- like so many I know- paying for storage buildings to hold all of that stuff, it costs you money you should not be paying out.
2. Someone has to do it. I hate to be morbid here, but the truth is that when you pass away (hopefully no time soon), someone has to clean out your home. Most likely, it will be your children and grandchildren.
Having been that person on several occasions, I can say without a doubt that it's a very sad and difficult process- one I hope to save my kids from. Sure, they will still have pictures and some items to go through, but I really don't want them to have to go through every single thing I have ever owned.
If you are like a lot of people, you probably have some thought about saving certain items for a loved one that they can have when you pass away. If that's you, ask yourself why you cannot give it to them now. Is there a reason they cannot have it until you die? Do you think they'll appreciate it more then than they would right now? Could they actually use it right now?
In some cases, there is a legitimate reason for waiting, such as the loved one is just too young at the moment for expensive jewelry. That's understandable, but if there is not a good reason, go ahead and give it to them.
3. Lastly, you have no clue how much money you really have until you sell a lot of your possessions. You might have enough stuff in your home to pay off a debt, take a trip you have always wanted to take or to pad your savings.
Try doing a massive declutter in your home- from the very top to the very bottom. Have some estate sales, put things up online for sale, or give them away. This big step can have a very big positive impact on your finances and provide a lot of emotional freedom.
Estate Planning
If you don't yet have a will, it's time to do so. I know, no one really wants to think about this- I completely understand. It's important to know, though, that if you don't choose who is in charge of your estate, who gets what, and so on, your loved ones will have to do it when you're gone. Do you know how many families fall apart when everyone is trying to be in charge? I can tell you that it is not pretty.
It's better for everyone if you figure it all out now. And, once you do it, it's out of the way. You don't have to worry about it again unless you need to update something. So find a lawyer, get it done, and go back to thinking happy thoughts.
Get Insurance
One more unpleasant topic to discuss in our financial goals over 50 is insurance. No, it isn't fun, but think of it as protecting yourself and your loved ones, instead.
You should consider a term life policy, especially if you still owe a mortgage or any other debt. Purchase it for a term that is long enough to pay off your debt. For instance, if you owe a 30-year mortgage, a 30-year term policy will make sure your family can pay off that mortgage if something happens to you first. Of course, it helps to pay your funeral expenses, so your family does not have to worry about that financial burden.
You should also consider long term care insurance. Should tragedy or sickness strike and you need ongoing care that your health insurance does not pay for, long term care insurance can be a great help.
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Savings Goals to Meet
Saving should be one of your most important financial goals over 50. You want to be sure you are saving for all of those wonderful things you want to do during retirement. Here are two important financial goals over 50 to focus on when it comes to saving.
Emergency Fund
You don't want anything to throw you off track with your budget, especially when you are retired.
Surprises at that point could cause a lot of trouble. Aim to have at least six months of living expenses put away, but the more, the better.
Retirement
While no one knows how much they need for retirement, a safe rule of thumb is to be sure you have six times your average annual salary in a retirement fund. And one of your financial goals by age 60 is to be on track to have eight times your annual salary, so be sure your financial plan moves you in that direction.
The best way to start saving is to open a savings account. It is very important to find a reputable lender. If you're ready to get offers, start here:
Create Passive Income
If you have not done this before, creating a passive or hobby income. A passive income can help you make extra cash for years to come. A hobby income lets you do something you love while making some cash.
In some cases, these two are the same, like when someone who loves to write puts an ebook up for sale. Though this is a hobby, it's a passive income because, after the original writing, the money keeps coming every time someone buys the book.
Then, there are hobby incomes that are more active. For example, you might enjoy making furniture. You can certainly make money selling it, but it does not qualify as passive because you only make money with the initial sale. You do not make money over and over again for the same product.
Regardless of which you choose, they are both great ways to make money between now and retirement. If you like, you can make this one of your money goals after retirement, too. Having something like this on the side throughout retirement can help you stay on top of everything.
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Consider a Move
I say consider because you might be very happy where you currently are, and you do not have to move. However, it never hurts to consider the possibility.
Many people have a large house that they originally bought when their children were living at home. Later, when the kids move out, they find themselves with space they no longer need. In these cases, moving to a smaller home might be helpful. Smaller homes typically cost less money.
If you have someone who cleans your home, you pay more for larger homes. If you are the one doing all of the cleaning, you are spending a lot of time doing so.
Some also set money goals to move to a new location with a lower cost of living, so their bills, in general, will be lower. Obviously, this is all up to you, but consider all the ways you can save with a move before making a decision.
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College Savings
If you have children or grandchildren that you have college savings accounts for, this is the time to finish funding them. You want to know that all of this is taken care of now so that you can actually retire with peace of mind.
Use the money from your estate sales, your passive income, or any other source you can think of. Or you could try to increase your monthly contributions by 10 or 15 percent, which will add up over time.
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Live a Little
I had quite the "Aha!" moment recently. For years, I have been so focused on preparing for the future that I forgot to enjoy the now. I have worked and pushed myself to the point of exhaustion on more than one occasion, hoping to provide a bright future for my kids and a nice retirement for my husband and myself.
While these are not bad things, I let them consume me. A few days ago, I looked up and realized that my babies are not babies anymore. One graduates next year, two are just a few years behind, and even my "baby" is nearly eight years old. I missed so many things with them because I got so caught up in building a future. Not only that, but there are plenty of times I could have been spending more time with my husband.
Of course, it's not too late at this point. We are all still alive and well, so I can work on spending more time with them. It's just that I regret all the time I missed with them and would love to go back in time and change it.
My point here is for people like me. Don't be so caught up in your future that you overlook your present. A big retirement fund is just not as enjoyable without the ones you love being within reach. Not to mention, working too hard can cause health problems and lead to premature death. What good is that retirement fund, then?
From this point forward- no matter what age you are- be sure you add some fun with those you love to your budget. Let that be one of your major financial goals over 50. Doing so is a valuable investment.
Conclusion
This is an exciting time in life- one where you can look forward to a future full of joy. The financial goals listed here can help ensure that your retirement is what you want it to be, whether that's living on an island or moving a state over to be closer to your grandkids. You can meet any goal you want as long as you have a plan and commit to following it.