50s involve a decade of significant transition many. As people step into their 50s, they are likely to deal with hectic work and family life, with multiple responsibilities. However, as the years pass, their kids are likely to get older and more independent, and hence the priorities and expenses of a person would also change. Kavan Choksi points out that smart financial planning in these years is extremely critical, as one would be likely to reach their retirement date within the next 10-15 years. People must do whatever they can in their 50s to secure their financial future.
Kavan Choksi underlines the financial planning approach one should follow in their 50s
No matter whether someone is in their 40s, 50s, or even 60s, it essentially is never too late to start financial planning and save for the retirement. Obviously, as a person gets older, the closer shall they get to retiring. Hence, they would have less time for compound interest to work its magic. Therefore, in their 50s, one must put emphasis on making larger deposits to their retirement accounts. If one has a house of their own, they may consider downsizing to cut down their living expenses. They just have to see to it that the market is in their favor, and that the location they move to is within their retirement budget. Working a bit past the target retirement age is another good way to catch up with retirement savings. Just drawing in a few more years of income can make a major improvement to the overall financial security of a person.
Medical expenses are considered to be the great unknown of retirement. While everyone would likely to try to remain as healthy as possible, having health issues with age is pretty normal. Moreover, a chronic condition can turn into an ongoing expense that majorly restricts the lifestyle of a person. Hence, it is smart to invest in long-term care insurance to stay prepared for any kind of medical costs that may crop up in the future.
As one gets closer to retirement age, they would want to reassess their risk exposure in discerning investment. They may not want to subject their savings to a too high degree of volatility, as once a person retires, they would want their savings to grow and not shrink. However, it is vital to be not too conservative either. Building wealth after the age of 50 will require a moderate level of risk. Otherwise, the savings of a person will not be able to keep pace will the inflation. One has to make the best possible use of compound interest to ensure that their savings last well into their 90s.
Kavan Choksi mentions that paying off any pending debt must be a priority for people in their 50s. After all, the last thing they would want to do with their retirement savings is to use it to pay off things purchased way before retirement, like a house or a car. People have to stretch their retirement money as much as possible, and doing so will become immensely difficult if they are still paying off debt. Hence, one has to be proactive about paying off their mortgage, student loans, credit card bills and more, in their 50s.