Smart money moves to make towards retirement

After the age of 50, you are closer to retirement than ever before so getting serious about securing your financial future should be at the top of your To-Do List! Since most Americans retire by age 63, many financial experts agree that being in your 50’s actually places you in the homestretch of your retirement savings journey. So now is the ideal time to get your financial picture in order for retirement and here are some tips to help get you there:

• Play catch-up with your 401(k). The maximum contribution limit for 401(k) accounts in 2018 is rising to $18,500 for elective contributions, up from $18,000 in 2017. Elective contributions are money you choose to have withheld from your paycheck and invested for retirement.  For older workers 50 and up, additional catch-up contributions are permitted. Catch up contributions are additional elective contributions older workers can make on top of the $18,500 every eligible worker can invest. In 2017, older workers were allowed to make catch-up contributions of $6,000.  This amount did not increase in 2018, so workers 60 and over will be allowed to contribute a maximum of $24,500 in elective contributions in 2018, compared with $24,000 in 2017.

• Pay off your mortgage. If your retirement savings picture is just right and you’ve gotten rid of high-interest debt then consider paying off your mortgage. You might be able to save a considerable amount in interest payments.

• Think about Long-Term Care. Over half of Americans age 65 and over will need long-term care.  Strike while the iron is hot, now is a good time to begin preparing for it. If you’re thinking of purchasing long-term care insurance, be aware that premiums typically increase as you age. There’s also a greater chance of being turned down completely due to health concerns as you get older.

• Get rid of your debt. You are approaching retirement which is a financially risky time so don’t even think about buying any more unnecessary ‘stuff’ until you pay off your debts. Keep in mind that debt is an anchor! Some older Americans may even be carrying debt that they don’t have the capacity to pay. Even worse, debt leads some retirees to skip paying for necessary expenses like quality food and medical care. Money experts recommend that older workers prioritize eliminating debt before saving for retirement. Taking on new debt is definitely financial suicide!

• Work longer. Working a few years longer than average will eliminate the debt that reduces the need for cash during retirement. Second, working longer also allows seniors to delay taking Social Security benefits. When you reach full retirement age, you’re eligible to collect 100% of your earned Social Security retirement benefits. You may receive retirement benefits early, but the size of your monthly payments will be reduced.

• Stop supporting adult children! If you’re in debt you may need to stop supporting children who should be out making a living for themselves. Sure, wanting to help your struggling child is natural but it could put you in a financial bind.

• Downsize.  A smart first step in eliminating debt is to downsize. Why live in a huge home when you have an empty nest? High housing costs force about one-third of adults 50 and older to pay more than 30 percent of their income for homes, forcing them to cut back on essentials and retirement savings, according to a report by the Harvard Joint Center for Housing Studies. Homeowners with mortgages are more likely to work longer and retire later than those whose mortgages are paid off, according to Boston College’s Center for Retirement Research.

• Work with a money pro. If you need help navigating through the retirement money maze consider speaking with a fee-only financial advisor. Check out your employer as well to see if the company offers free retirement investing assistance.

• Just say “NO!” Younger family members especially seeking financial help will oftentimes approach older relatives. If offering a helping hand will make you take on more debt or tap into savings, consider yourself first and just say, “NO!”

• Cut back on the extras. Frugality is key when you are trying to save a couple of bucks. Some money-saving moves to consider—cooking at home, biking/walking/carpooling to work, doing your own hair and nails, brown bagging lunch, and couponing. Try making your own natural cleaning products, body scrubs and lotions by finding recipes online. Eliminate costly bad habits like alcohol and smoking. Look to downgrade your cable service. Check out cheap or free entertainment options like local art or music fairs and free library programs. Buy generic or store brand items.