When you’re young, you generally have time on your side. That’s one of the many great things about youth. Most minor mistakes you make, and even a few major ones, can be solved (or at least diminished) by the passage of time.
Why Your Financial Decisions Matter More After 50
As you get older, though, your time window becomes smaller, and suddenly the results of your decisions start to matter. This is especially true when it comes to your finances. If you’re over the age of 50, here are four things you need to take care of, sooner rather than later.
So while there’s a lot to think about at age 50, there’s a lot to look forward to as well. Taking proper steps now, while you still have time, may lead to some nice rewards once you’re retired.
- Align Your Financial Plan with Retirement Goals: The first thing to do is to make sure your current financial plan is lined up with your retirement goals. You’re at least 50 years old now. This means you’re in an ideal position to determine where you are and where you need to be, because while retirement for you isn’t just around the corner, it’s not in the distant future either. Maybe you’re making more money right now than you thought you would be, or less money? What about your kids, or your grandkids, if you have them? Your financial plan should reflect whatever your most recent and most pressing goals are. If you need to make any adjustments, now is a great time to do that.
- Assess Your Parents’ Financial Health: Next thing to do, if you’re fortunate enough to still have your parents around, is to check on how they’re doing financially. Are they able to live comfortably? Is their own financial plan still meeting their objectives? And keep in mind that as our parents get older, their decision-making sometimes gets a little cloudy, and it may be up to you and your siblings to help keep them as grounded as possible. This can sometimes be a bit tricky, so you have to tread carefully here, but it’s important that you at least let them know you’re looking out for them.
- Revisit Your Estate Plan: If you haven’t checked on it for a while, it’s likely that your beneficiary designations need to be updated. So check your retirement accounts, life insurance and other assets to see that they’re all going where you want them to go. If you’ve remarried, check to see that your ex-spouse is only getting what you want them to, if anything at all.
- Maximize “Catch-Up” Contributions: And finally, make sure you’re taking advantage of the “catch-up” provisions. IRS regulations allow those age 50 and older to contribute an additional $7,500 per year to their 401(k), 403(b), 457 or SARSEP plans, which means you can defer up to $30,000 in a retirement plan. There are catch-up contributions that apply to your Traditional or Roth IRA too, although with those, you’re only allowed an extra $1,000 of deferral as a catch-up contribution. And as you continue to work over the next ten or 15 years, those extra amounts can really add up.
We work on strategies for pre-retirees every day at Accardi Financial Group, so if you need some additional guidance or suggestions on what else you should consider doing right now, make an appointment! As always, we’re here to help.
The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
Different types of investments and/or investment strategies involve varying levels of risk, and there can be no assurance that any specific investment or investment strategy will be profitable for a client’s or prospective client’s portfolio, thus, investments may result in a loss of principal. Accordingly, no client or prospective client should assume that the information presented serves as the receipt of, or a substitute for, personalized advice from Accardi Financial Group or from any other investment professional.
You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.
IRA withdrawals will be taxed at ordinary income rates. Withdrawals prior to age 59½ may also be subject to a 10% penalty tax.
Roth IRA distributions of principal from a Roth IRA are tax-free; however, any earnings will be taxed at ordinary income rates and a 10% penalty tax will apply if withdrawn prior to age 59½ or within five years of the date the Roth IRA was established, whichever is longer.
This material was prepared by Lucia Capital Group.
Danielle Accardi is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the respective names Lucia Capital Group and Accardi Financial Group which are separate entities from LPL Financial. LPL ART-491196 (10/23)