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The Most Important Moves in Retirement Occur in Your 50s

For most Americans, retirement is something that will happen “one day.” But that “one day” becomes a lot more real the decade before you retire.

According to financial experts, the most important moves in your retirement happen in your 50s. It’s your final chance to get your affairs in order and ensure everything is set up for a secure retirement.

The Big 5-0!

Three years ago, 57 percent of Americans felt positive about their ability to retire comfortably. In the last few years, that number has plummeted. Just 22% of people approaching retirement age said they'll have enough money to maintain a comfortable standard of living, according to the 2022 Schroders US Retirement Study. 

Making the following smart money moves in your 50s can put you on the right path to a happy retirement:

  1. Envision Your Ideal Retirement

You’ve worked for at least 30 years, and you’re starting to reflect on the next chapter.

If you haven’t thought about life after leaving the workforce, now’s the time to do it.

There’s no right or wrong way to retire.

Focusing on the what, when, and where will help you picture your vision of retirement.

  • What do you plan on doing when your time in the labor force ends?
  • When would you like to retire?
  • Where will you retire?

Answering these questions will help you know your retirement number and help determine whether your savings are on track. If not, you can take advantage of higher catch-up contributions for people 50 and over.

PRO TIP: If you’re married, ensure you discuss the above points with your spouse or partner.

  1. Review Your Investment Portfolio

Your current investment allocations might not sustain your retirement plans.

Working Americans say they expect to retire at an average age of 66, up from 62 in 2002, according to a 2022 Gallup poll. But most retirees don't stay on the job nearly that long. The average retirement age is 61 in 2022, up from the age of 59 in 2002. You will need to be more conservative with your investments as you approach this age.

When it comes to market volatility, you might want to avoid huge ups and downs.

Your portfolio should mostly consist of fixed-income assets (CDs, bonds, Treasuries) so that if the market drops abruptly, your net worth or retirement lifestyle won’t be affected that much.

3.  Budget for Health Care Costs

Healthcare expenses could represent a considerable portion of your retirement spending.

According to the 2022 Fidelity Retiree Health Care Cost Estimate, the average American couple will need $315,000 to cover medical expenses in retirement, not including long-term care.

Yes, Medicare will cover most of the bills, but you’ll still need to pay premiums, copays, deductibles, and other out-of-pocket expenses for medical supplies and prescription drugs.

If you have a high-deductible health insurance plan, it may be a good idea to add a health savings account and contribute as much as possible. The annual “catch-up” contribution amount for Americans age 55 or older in 2022 is $1,000.

The last decade before you retire is also the perfect time to consider a Long Term Care (LTC) rider.

  1. Become Debt Free

One of the biggest gifts you can give yourself is entering retirement debt free.

Chances are you will have a smaller income in retirement, which is why it’s vital to eliminate as much debt as possible in your 50s.

Start by tackling high-interest debt, such as credit card debt, and gradually work your way down the list of other debts until you’re free and clear.

  1. Update Your Estate Plan

Who will make medical decisions for you or handle your finances if you are incapable of doing so yourself? Your estate plan should clearly explain how you wish to handle these tough situations.

Take the time in your 50s to update your will, add a durable power of attorney if necessary, and write a living will that gives directives for end-of-life care.

Another thing to consider is how you will transfer assets to your heirs, especially if your retirement strategy involves purchasing life insurance.

Retirement should be an enjoyable stage of life, yet it can be stressful if you worry about having enough funds to get you through your post-working years.

Making these money moves in your 50s will better your chances of enjoying that comfortable retirement you’ve always dreamed of.


Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. 

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