Thursday, June 5, 2008

Retirement Planning at 50

If you are fifty right now, you are among the last wave of Baby Boomers scheduled to overwhelm the retirement system, bankrupt Social Security, and tax the health care system of our country as never before.

Unless of course you have subscribed to what author Louisa May Alcott suggests this age should be. She wrote, "Have regular hours for work and play; make each day both useful and pleasant, and prove that you understand the worth of time by employing it well. Then youth will be delightful, old age will bring few regrets, and life will become a beautiful success."

Is it that easy? In most instances, the answer is yes. At age fifty, something you could not possibly have imagined at 20, even thirty-years old, you should have a fairly good idea of what your retirement will look like.

Finding ways to improve what might be an unclear vista are a little harder at this age but far from impossible. You know more financial stuff than you would care to admit, made more mistakes than you would like to acknowledge, and probably regret decisions you have made along the way. No matter. They can all be fixed.

The solutions unfortunately, will be a little more severe because of it but they will not imprison you in a life without some joy.

The plan is threefold. You need to determine how long it will take to get completely debt free. There are lots of websites and blogs out there professing a debt-free existence � which if you are working is just a silly notion. Retirement is no place for a mortgage payment. It is no place for credit card bills. Do the math and find a solution. If you need to see a credit counselor, do not hesitate. Pick a not-for-profit one and stay on the budgetary diet they give you.

Then ask yourself, how is your health? Can you work until you are seventy? If the answer is yes, then begin to save as much money as you can in your employer's tax-deferred account. Remember, seventy is only four to five years beyond our current notion of retirement age. If you have chosen an occupation that allows you to continue working, consider it. If you have a job that will not accommodate you into your seventies, begin to develop some alternatives now.

It is not too late to begin saving in your 401(k) at work. You must structure it differently and contribute a good deal more (the maximum will help you catch-up and the government has allowed for additional catch-up contributions when you reach fifty), but it will prove to be better than not having one.

And lastly, begin looking at your after-work sources of income. These are generally fixed sources of cash. Take your Social Security payments, any pensions you might receive, and any other source of income, add them together and create a household budget around them. Can you live on this amount of money? Can you afford taxes, insurance and upkeep on your home? Is it too big? Will it need major repairs to last until you are eighty, or ninety?

These are hard questions. But you are not without options.

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