Financial Milestones: For Those in Their 50s

By Mitchell J. Smilowitz, CPA

While there's some overlap in financial concerns, each decade brings unique challenges and opportunities that require careful planning to ensure financial security and a comfortable retirement. In your 50s, for instance, you're likely in the peak earning years of your career and you are probably spending less time on career advancement.

Here are some financial actions to consider in this critical decade:

  • Maximize Retirement Contributions: Take advantage of catch-up contributions to your JRB retirement account. In 2024, for instance, a person who is age 50 or older can boost their annual retirement savings by $7,500 more than younger workers, for a maximum salary reduction contribution of $30,500.
  • Reduce Debt: Aim to pay off high-interest debts like credit cards and personal loans. Reducing debt can free up more of your income for savings and investments as you approach retirement age. For those with high-interest debt, it might make sense to take a loan against your JRB retirement account. You will lower your interest rate and, more importantly, you will be paying interest to yourself as you pay off the loan. Speak to the JRB about whether this approach makes sense for you.
  • Assess Your Retirement Readiness: One of the most crucial financial milestones in your 50s is ensuring you have a solid plan in place for retirement. While it is important to evaluate your retirement savings at every age, at age 50+ you have less time to catch up if you are behind. It is important to anticipate your income needs in retirement and project the income you can generate to determine if you're on track. Consider contacting the JRB for a complimentary financial consultation.
  • Review Your Estate Plan: Review and update your estate plan, including wills, trusts, and beneficiary designations on accounts. This ensures your assets are distributed according to your wishes and can help minimize estate taxes and probate costs.
  • Evaluate Your Long-Term Care: Investigate long-term care insurance options to protect your assets and provide for potential future healthcare needs. This becomes increasingly important because your need for assistance increases as you age and long-term care insurance costs much more the longer you wait to purchase it.
  • Diversify Your Investment Portfolio: In your 40s, you can maintain an aggressive portfolio because you have a longer time horizon to recover from market downturns. In your 50s, it’s a good idea to reassess your investment portfolio to ensure your risk tolerance aligns with your retirement timeline. Depending on your retirement readiness, you may want to reduce risk in your portfolio. Begin by reviewing the JRB’s Model Asset Allocation Portfolios.
  • Begin Retirement Healthcare Planning: Understand your healthcare coverage options, including Medicare and supplemental insurance. Plan for potential healthcare expenses in retirement and explore ways to cover them adequately.
  • Begin Thinking About Housing in Retirement: While this may not be appropriate for clergy who can claim the parsonage allowance in retirement, others may decide to accelerate mortgage payments to reduce debt. Or, you may decide that downsizing or relocating to a more affordable area makes sense for your financial situation and lifestyle. Speak to the JRB about whether paying off your mortgage makes sense for you.
  • Consider Your Social Security Strategy: Determine the optimal time to start claiming Social Security benefits based on your financial needs and longevity expectations. Delaying benefits can result in higher monthly payments, so weigh your options carefully.
  • Maintain a Robust Emergency Fund: An emergency fund remains important as you age because you are more likely to incur unexpected expenses or income disruptions. Aim to have enough savings to cover at least six-to-twelve months of living expenses. The JRB complimentary disability plan and pension continuation insurance provides basic coverage in the event that something happens to you, but it doesn’t cover home repairs, car repairs or other emergency financial needs.

By addressing these financial milestones in your 50s with the support of the JRB, you can make informed financial decisions, identify potential blind spots and develop a comprehensive plan to achieve a secure and comfortable retirement. Contact us via email or call 888-JRB-FREE (572-3733) to set up a consultation.

May 2024