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Considerations in Your 50s

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Focus your resources on the years ahead

When you’re in your 50s, chances are you’re thinking more and more about retirement. As you get closer, it’s a good idea to assess your progress and review your goals.
Get your retirement goals into focus
What does your ideal retirement look like to you today? You may have new ideas about what you’d like to do and may even have a date in mind when you’d like to retire, or start phasing into retirement.

Have your goals and expectations changed? Before you can make sure you have enough to retire, you need a clear picture of where you’re headed. Consider meeting with a financial advisor to see if you’re on track to reach your goals.
Make the most of your retirement investments
Just as you see your doctor or dentist every year for checkups, it’s also a good idea to review your retirement savings each year. You need to fine-tune your investment strategy to make sure you’re still on track to meet your goals.

By this time, you may also have retirement accounts with former employers that you can consolidate into your current employer’s retirement plan or an IRA. Consolidating your accounts will make it easier to manage your savings and have more control over your investments.
Boost your retirement savings
You may want to increase the amount you’re saving in tax-advantaged retirement plans, or save even more by saving outside your employer’s retirement plan. Here’s an overview of some steps you can take to save even more:
  • Make the most of your retirement accounts
    • Contribute enough to your workplace retirement plan to receive all possible matching funds offered by your employer.
    • If you don’t have access to an employer-sponsored plan, start by maximizing your contributions to an Individual Retirement Account (IRA).
    • Even if you’re already contributing to your employer-sponsored plan, an IRA is another great way to save. Consider a Roth IRA to build potentially tax-free savings in addition to your tax-deferred 401(k) plan.
    • If you’re age 50 or older, contribute an additional “catch-up” amount to your IRA and workplace retirement plan.
      • For Traditional and Roth IRAs, the catch-up amount is $1,000 above the standard limits and adjusted for inflation in subsequent years.
      • For 401(k)s (not including SIMPLE plans), the catch-up amount for 2014 is $5,500 above the contribution limits and adjusted for inflation in subsequent years. If made each year until retirement, these additional deposits can help your retirement savings grow.
  • Save beyond your retirement accounts
    Contributing maximum amounts to your retirement accounts might not be enough, particularly if you don’t have access to an employer-sponsored plan such as a 401(k). Determine if you need to supplement your tax-benefited savings with a regular, taxable investment account.
Manage your debt with retirement in mind
Start mapping out your income and expenses, creating a comfortable balance that leaves you the flexibility to enjoy life with only the amount of debt you truly need.
  • Consider the pros and cons of paying off your mortgage before you retire. Doing so may eliminate a major monthly expense, but you need to balance that against any tax benefit you might be giving up.
  • Before you borrow, carefully analyze the impact any major purchases may have on your cash flow.
  • Look over your outstanding debt where you are paying higher interest, like credit cards, to determine if a consolidation loan may make sense for your situation.
Protect your retirement income — and legacy
Insurance can become a valuable income and estate planning tool as you approach retirement, and it should cost much less to buy in your fifties than in your sixties. Learn how insurance can work for you.
  • Life insurance can help replace pension or Social Security income in the event you outlive your partner or spouse.
  • If you have specific legacy goals or are concerned about estate taxes, life insurance can be used to create an inheritance or help meet estate tax obligations.
  • Help protect your future retirement income by considering products such as annuities.
  • Look into long-term-care insurance, which can help meet expenses that could deplete your estate in the case of an extended illness.
  • Review and ensure your beneficiary designations are up to date.
Get serious about your retirement paycheck
If you are five to ten years from retirement, create a plan for how you will generate a reliable income stream from your accumulated savings and other sources.

At this point, you will need to be detailed about the expenses you want to cover and how and when you will withdraw money from the various sources of income. It is a great way to check that your savings plan and desired retirement date are in line with your retirement plans and associated expenses.

For a list of tips and ideas to help you begin creating your plans for retirement, visit our retirement checklist for your 50s.
 
Recordkeeping, trustee and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A. This information is for educational purposes only and does not constitute investment, financial, tax or legal advice. Please contact your investment, financial, tax or legal advisor regarding your specific needs and situation.