Retirement Planning Strategies for Clients in Their 50s

My Comments: If you are already retired, don’t bother with this. If you haven’t yet retired, there may be something here for you.

Waiting for retirement is like watching grass grow, or watching a car rust. You lose interest in a hurry. The problem is it’s going to happen, whether you pay attention or not.

Retirement is much the same for someone with many years left to work. But unless you die first, it will arrive. Count on it.

And when it does, it really helps if you’ve paid some attention to it along the way.

By Tahnya Kristina | February 23, 2017

No one knows how long they’re going to live. What we do know is that over the last 50 years the average life expectancy has increased. According to the World Bank the average life expectancy in 1960 was 70 and in 2014 it was 79. Thanks to medical advancements and the surge of healthy living awareness, people are living longer. That’s great for people, but it also means they need to plan for retirement savings to last longer – maybe longer than expected.

How does a financial advisor help clients plan for life during retirement? There are a lot of questions that need to be asked, including where will the retirement income come from to how long will retirement savings last? If clients have been saving, but not planning for retirement it’s never too late to get started. Here are three ways financial advisors can help 50-somethings plan for retirement.

1. Maximize Retirement Contributions

Ideally, this is the time in a client’s life when they are at their highest earning potential and that presents a big opportunity for retirement planning. With a high salary and low amount of debt (because the mortgage is paid off or close to being paid off) clients can take advantage of maximizing their retirement contributions.

If you’re in your 50s and have unused contribution room in an IRA, now is the time to take advantage. If employers offer a 401(k) plan, employees should increase their contributions to take advantage of any matching contributions. This will help boost retirement savings in the years leading up to retirement. Clients can also inquire if their employer offers non-registered group savings plans such as stock plans to help boost their savings and maximize their contributions.

2. Find a Balance Between Growth and Preservation

Retirement planning in your 50s poses an interesting challenge. On one hand, this age group wants to squeeze as much growth out of their investments as possible during the last of their contribution years. At the same time, they might now want to take a lot of risk with their accumulated retirement savings because in a few years they will need to live off the income. That’s where the assistance from a professional financial advisor comes in.

As a client’s planned retirement date approaches, it’s important to rebalance their retirement portfolio – or at least review their goals and asset allocation on a yearly basis to determine if rebalancing is needed. When 20-somethings invest for retirement they have many years to recover from market downturns. Unfortunately, that is not the case for retirement planning in your 50s. Reviewing investments to ensure clients are comfortable with the level of risk and the time horizon is still on track is crucial for successful retirement planning in your 50s.

3. Start Thinking About Lifestyle in Retirement

For 50-somethings retirement can be anywhere from five to 15 years away. The best way for financial advisors to help clients plan for retirement in their 50s is to ask clients to think about the lifestyle they want to have in retirement. The key to successful retirement planning is to be realistic.

Clients should consider factors such as where they want to live, if they want to travel, will they have dependents and how they plan to spend their time. From there advisors can create a retirement projection based on current and future savings, income sources and monthly obligations such as debt and living expenses.

Thinking ahead about estate plans and future tax brackets also plays an important role when planning for retirement in your 50s. These are all discussions financial advisors should have with their clients to help set realistic retirement goals and create an attainable retirement plan.

PS – I’m building an internet course called The SECRET(s) to a Successful Retirement. I’ll touch on all of this and dozens of other retirement planning issues, all wrapped in a convenient package that someone can reference year after year. Watch for it to be launched in the coming weeks. Tony

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