Eight things you must do when you turn 50
Just Plain Talk: May 31
Regardless of your age it doesn't hurt to start thinking about these immediately.
At 50, dinner and a movie are the whole date, not just the warm up. Ha ha. For all the jokes about aging, there are dangers. High debt levels and inadequate savings are just as hazardous as illness or disability. But at 50 you are at the point of no return where poor planning will wreak havoc on your golden years.
1. Evaluate your career. People want to retire, but remember if you earn $50,000 annually you are back-loading your retirement kitty by $1,000,000, assuming a 5 percent inflation adjusted withdrawal. While Dennis Hopper touts owning your own business in retirement, try it as a sideline
2. Focus on retirement. Over 40 percent of 50-somethings have minor children. Some may have parents who need care, while others have both. Still your retirement should be your prime focus. Will your savings be sufficient for 30 years of retirement? Never in human history will so many people face so many years of retirement.
"I like my work and I will work past 65." That may sound good when you are 50, but you may not be able to work when you are older.
3. Get out of debt. I mean all debt, not just the credit card but the mortgage, too. Grandmamma and granddaddy had this thing figured out. You paid off your mortgage then you retired. Nowadays people have all sorts of ways to borrow money on their home. While it may be convenient that doesn't make it a good idea. What is a good idea is eliminating or minimizing all fixed expenses in retirement. Start now.
4. Throw the boomerang back. If your children are out of school and not disabled then they should stand on their own feet, economically speaking. Limit gifts to Christmas, their birthday or an anniversary. You are putting your financial future at risk (and theirs).
5. Review your life insurance. It may be tempting, and make good sense, to drop life insurance coverage if your mortgage is gone and your children are out of the house. However, life insurance can also offset lower pension and Social Security benefits for a surviving spouse. Don't drop any life insurance until there is some clarity about the estate tax liability if you have an estate over $2 million.
6. There is other insurance to think about. If you are still working consider disability insurance. While employer sponsored disability insurance is often inexpensive, make sure that it is adequate and appropriate. An individual policy may give better coverage. Insurance agents make a persuasive argument for buying long-term care insurance as soon as possible. Consumer Reports says that waiting until age 65 is more appropriate. What's the best time? We recommend disability insurance while you are working, then LTC when you retire. If you can afford both, consider both. As a minimum, while you are in your 50s you need to start learning about LTC insurance options. Long-term care planning is much more than buying insurance. Health care directives, revocable trusts and discussions with your immediate family are part of the puzzle.
7. Get to know your doctor. One of the disadvantages of growing old for men is the annual prostate exam. Get over it. Plan on annual visits to your doctor.
8. Don't join AARP. That's no typo. Whether they want to admit it or not, the AARP promotes economic policies that are not in the best interests of our nation. Now they are resorting to using cuddly kids in their ads and imply the group wants to solve our Medicare and Social Security crisis. What a load of bull! The AARP ignores any type of serious debate on these two entitlement programs. The status quo for these programs cannot be maintained without taxes being raised. The alternative is for benefits to be reduced. Hey AARP, quit lying to us!
Growing up may be optional. Growing old may be mandatory but proper planning is essential and critical.
Buz Livingston is a certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Listen to his radio program, Money and Music, every Wednesday at 8 a.m. on 107.1FM, 30A Radio or www.30Aradio.org. Contact him directly at (850) 267-1068 or at LivingstonFinancial.net.
