SPECIAL FROM Grandparents.com
Here's what you need to know about saving, spending and estate planning.
1
Find out how you stack up against others your age.
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This will help you see if you’re on track, behind your peers or — lucky you! — ahead of the pack. Check your relative financial health in the article, “Next Avenue Money Scorecard: How Do You Rate?” Also, go to Flexscore.com to find your personal finance Flexscore, which weighs your assets, debt, investments, income, and other factors to determine your financial health.
2
Take advantage of the “catch-up” rules.
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Save more for retirement and reduce taxes once you hit 50 by knowing the facts. Under these "catch-up" rules, you’re allowed to invest $1,000 more in a traditional or Roth IRA than younger folks — up to $6,500 for 2013 and 2014. Similarly, people 50 and older can put an additional $5,500 in their 401(k) or similar employer-sponsored retirement plans in 2013 and 2014, for a maximum annual contribution of $23,000.
3
Reconsider your need for life insurance.
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As Next Avenue blogger Kerry Hannon wrote in “Do Women Over 50 Need Life Insurance?” (the advice is applicable to men, too), once you’re in your 50s, you may no longer require the coverage to protect your family that you once did.For instance, you may have accumulated enough assets and income streams to make the insurance unnecessary. Or your children may now be self-sufficient adults who no longer need the money that death benefits would provide.
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4
Exploit your age to score savings on insurance.
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You could lower your premiums on homeowner's and auto insurance because of your loyalty to your insurer or your job tenure.See “Car Insurance and Homeowner’s Discounts” for specifics.
5
Get real about health care costs in retirement.
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You can now probably envision when and how you hope to retire, so it’s a good time to begin planning for these expenses.Americans 50 and older underestimate the annual costs of long-term care by more than three times the actual expense, according to a recent Nationwide survey. By 2030, the year the youngest boomers will retire, the cost of a nursing home will reach $265,000 a year, according to Nationwide.
6
Hire a fee-only financial planner.
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At this age, you can’t afford big investment mistakes since you won’t have many years to make up for them. A good fee-only planner can provide useful advice without the conflicts of advisers who earn commissions on financial products they sell.
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7
Start planning for your financial independence, not retirement.
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Instead of trying to come up with your “number” (how much you’ll need in retirement), estimate the amount of money you’d need to amass to get to the point where you could work only as much as you want. That’s the definition of financial independence by Jonathan Chevreau, author of Findependence Day: How to Achieve Financial Independence: While You're Still Young Enough to Enjoy It.For more on this topic and calculators that can help you run the numbers, see "Plan for Financial Independence, Not Retirement."
8
Learn how much your 401(k) would provide in monthly income.
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When you stop working full-time, your monthly income is a critical figure. Unfortunately, many people in their 50s and 60s fall for what’s known as the “wealth illusion” — they see a decent-sized balance in their retirement plans and assume that’ll last far longer than it really will. When you’re no longer earning a salary, cash flow is king.
9
Be sure all your beneficiary designations are up to date.
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You’re now at an age when it’s time to get serious about estate planning. And if you haven’t kept your designations current (for your employer-sponsored retirement plans, IRAs, life insurance policies, mutual funds, bank and brokerage accounts, annuities and 529 college savings plans), your assets could go to the wrong people when you die, regardless of what your will says.
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10
Tell your kids and grandkids about the life lessons you’ve learned.
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Think of this as a holistic estate-planning tip. In a recent Merrill Lynch/Age Wave survey of Americans over 45, respondents were asked “What’s most important to pass on to the next generation?” Their No. 1 answer: “Values and life lessons.”
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Before You Go
