Are you in your 50s and now have some disposable income? It is time to take advantage of retirement planning opportunities, according to the Sioux City Journal in “In Your 50s? Do These 3 Things to Plan for Your Retirement.”
If you have found your niche, now it’s time to take advantage of it.
Unfortunately, many people who turn 50 start thinking now is the time to retire early, go on extravagant vacations, or buy themselves big-ticket items that they’ve always wanted. A better approach is to consider this a time to make the most of your income, keep saving for retirement, and stay on a steady course.
Use the catch-up options available to you. The federal government knows that many people don’t have the means or the motivation to save for retirement until later in their careers. That’s why there are several provisions in the tax laws that let you catch up, once you reach 50.
- You can add an additional $1,000 above the annual contribution limit to an IRA.
- You can add $6,000 in annual contributions to 401(k)s and similar employer-sponsored plans after age 50.
- Once you pass your 55th birthday, you can make an additional $1,000 annual contribution to health savings accounts.
If you’ve got the cash to spare, these are great opportunities.
Educate yourself about Social Security. Many people rely on Social Security for their retirement, while others use it as a safety net. You’ll want to start learning about the rules.
Taking your first benefits has an impact on how much you’ll receive over your lifetime. Yes, you can start at age 62, but the difference in the amount you’ll get at 62 versus 70 is substantial. If you plan to keep working indefinitely, maximizing earnings is the best way to boost your Social Security benefits.
Get access to savings in the early years of retirement. If you can afford to retire in your 50s, know when you can tap your retirement savings. It won’t matter when you withdraw if you’ve used regular taxable accounts to invest your savings. However, you’ll need to know the rules if your money is locked up in 401(k)s, SEPs, IRAs, and other tax-favored accounts. Penalties for taking withdrawals before the specified age can take a big bite out of your retirement accounts.
Once you’ve celebrated your 50th birthday, you may choose to work every day for another 10 years or 20 years, or start to back off. However, keeping these three key ideas in mind as you plan for the future will help put you in the best financial state possible.
If you are in your 50s, now is the time to meet with an estate planning attorney for advice on creating an estate plan that fits your unique circumstances.
Reference: Sioux City Journal (Aug. 25, 2018) “In Your 50s? Do These 3 Things to Plan for Your Retirement”
