The years between age 50 and age 60 are a transitional time in your life. You are not yet ready to retire, however, you are not in a position where you can take risks with your money. What you do with your money in this pivotal stage in your life will determine if you are able to retire well or not retire at all.
Make Sure You Are Taking Advantage Of Your 401k
If you have a 401k, you should be putting as much money into it as possible. Workers who are 50 or older can put more money into their accounts each year than they could before turning 50. You can invest up to $6,000 of your earnings as opposed to $5,000 of your earnings. That extra money really adds up over the years.
Figure Out Where You Stand Financially
You won’t be able to work forever. There is a good chance that you don’t want to work forever. However, you need to consider where you are financially. What will you need to do in order to get to retirement in good shape? Some good tips are to not take on any new debt and make sure that your kids are doing OK financially. Make it clear that they need to be financially responsible for themselves within the next 5-10 years.
How Do Your Investments Fit In With The Economy And Your Financial Goals
You should be taking fewer risks as time goes by. Invest in tangible items such as gold. This may be a good time to invest in an art collection or perhaps purchase a couple of rental properties. These items will have a tangible value that will be determined by more than the confidence that investors have in the dollar. One little panic can completely wipe out your 401k. Have a hedge against that ever happening.
Start Thinking About Your Long-Term Tax Liabilities
Depending on how you have invested over the years, you may have to pay a larger amount of income tax as you start to withdraw your investment profits. Investing in stocks and bonds will be a great way to lower your overall tax burden. Capital gains taxes are up to 20 percent lower than your normal tax rate. You might want to consider taking a larger tax hit when you have money coming in. When you are retired, you can enjoy your savings without giving too much of it to the government.
Your 50s are a time of financial and social transition. You want to be able to enjoy your life and your money. This means investing wisely, investing safely and getting rid of as much debt as possible. If you have kids, make sure that they understand you are not an ATM. Doing all of this now will ensure you have a great financial situation for the rest of your life.