It you’re hitting the big 5-0 and your starting to think about retirement, you might be worried that you don’t have enough saved to ever stop working, let alone to actually enjoy yourself in retirement. But even if you’re a bit behind on your savings goals, don’t worry. This guide will tell you what you need to know about how to invest for retirement at age 50. Alternatively, you can consider enlisting the help of a financial advisor who specializes in retirement planning. Either way now is the time to get serious about your financial future, so you are ready for your senior years.
How Much Should You Have Saved at 50?
There isn’t a hard-and-fast rule about how much you should have saved by the time you get to age 50. Generally, most experts would say that five to six times your yearly salary is a good benchmark to aim for, but a lot of it depends on what you want to do once you’ve retired. You can’t change the past either way, so don’t worry about what you should have been doing and instead think about what you can do now to make sure you’re ready for retirement.
Figure out Your Retirement Goals
Before you actually start investing, you need to think about what your retirement goals are and what you want to do when you retire. At what age would you like to stop working? Will you continue to work in a part-time capacity once you’ve retired? Do you want to live in the city you currently reside in, or are you interested in moving? Do you want to travel or do anything else that you weren’t able to do while you were working?
Once you’ve answered some of those questions for yourself and your family, you’ll be in a better place to figure out how much you’ll need to save for retirement. You can use SmartAsset’s retirement calculator to see if you’re currently saving enough each month to be where you want to be when you retire. And if you’re not, you can start figuring out how to close any gaps.
What to Do If You Have No Retirement Savings
Once you’ve figured out what your approximate money needs in retirement will be, it’s time to figure out how to get there. You’ll want to boost your savings and make your money work for you so you have enough when you reach the age at which you hope to retire.
Even if you have no retirement savings at age 50, it isn’t too late to get started. Here’s how:
You should be using a retirement account of some sort to invest your money. Whether it’s a 401(k), a 403(b), a traditional or Roth IRA or some other plan, having an investment vehicle to put away money is key. If you’re really kicking up your savings at age 50, chances are you’re decently close to retirement. Because of this, some experts recommend choosing lower risk investment options like bonds. You won’t see the huge returns that riskier choices like stocks can bring, but it’s less likely you’ll see big losses, even if the market turns volatile.
Another thing to remember: now that you’re over 50, you have a bit more leeway in terms of 401(k) contributions. Employees can normally contribute $18,500 per year to their retirement plan. If you’re over 50, though, you can contribute up to $6,000 more on top of that. If you have the means to do it, try to max out your 401(k) contributions. Make sure to find out if your company provides a match for 401(k) donations. This is essentially free money for your retirement fund, so try to contribute at least as much as your employer will match. Also pay attention to 401(k) vesting rules: Some companies require you are employed for a certain amount of time before company matching funds are officially yours.
Consider Your Taxes
Just because you’re retiring, the tax man doesn’t stop coming to your door. When you’re planning for your retirement, it’s important to think about what taxes you’ll need to pay. If you’ve saved for retirement using either a traditional 401(k) or a traditional IRA, you’ll be paying taxes on that money as it is dispersed to you in retirement. If you used a Roth 401(k) or Roth IRA, you already paid taxes on that money before it was invested, so you’ll be able to withdraw it tax-free in retirement. For this reason, people who expect to be in a higher tax bracket in retirement than they are in currently should especially consider using a Roth IRA.
To find out if your state is tax-friendly for retirees – or to see if there is another state that might make more sense for you to retire in – use SmartAsset’s guide to retirement taxes.
The Bottom Line
Even if you’re already 50, it isn’t too late to get serious about saving for retirement. You may not have all the luxuries someone younger does, but through careful consideration and planning you can get yourself ready to move on to the next stage of your life. Just make sure you have clear goals defined, and that you take advantage of all the opportunities you have to save. With some hard work and discipline, you can be on the path to financial security in your golden years in no time.
Retirement Investing Tips
- Get help from a professional: You might want to think about finding a financial advisor to manage your money. A financial advisor will use their expertise to help you get to your goals. Just make sure you find one who is a fiduciary, meaning they have to make investment decisions with their clients’ best interests in mind. If you’re not sure how to start selecting a financial advisor, SmartAsset’s free financial advisor matching tool can help you find an advisor that’s right for you. You will be asked a short series of questions and upon completion, you will be paired with an advisor in your area who meets your needs. All the advisors on SmartAsset’s platform are fiduciaries and none of them have disclosures.
- Government money: Don’t forget about Social Security. Use this Social Security calculator to estimate what you can expect your Social Security checks to be in retirement. After all, this money will play a role in your overall retirement budget.
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