Money Matters in Your 50s, 60s, 70s

Money Matters in Your 50s, 60s, 70s

- in Fall 2015, Financial Planning

Exercise. Diet. Medical checkups. Keeping physically fit requires a healthy balance of lifelong practices, common sense and willpower — the same holds true for financial fitness.

An average American man who is 55 today can expect to live another 25 years and women, 28 more years, according to the Social Security Administration. That means decisions about housing, lifestyle, investments, insurance and legal matters today will have long-term implications.

About one third of Boomers plan to earn an income part-time after they retire from their current job, according to an AARP survey of 5,000 workers ages 50 to 64.

Of that group that intends to continue working for pay, 44 percent want a job that’s different from their current one. The survey, released in September, indicates that 6 percent have no plans to retire, about one-fourth plan to retire before they turn 65 and another 25 percent intend to wait until they are 70 or older.

The first thing everyone should  do – whether married or not – is to decide how much money they think they will need, where they want to live and expectations for post-retirement life.

“They (need) to be sure they have in their head what it is they want for their future,” says Dee Siegferth, The Milestone Center for Retirement and Estate Planning in Akron.

People in their 50s should talk about how they want to live 15 years from now. In your 60s, think about life in 10 years and those individuals in their 70s, consider what lifestyle they desire in five years, she adds.

Among items to consider – and these can be made much easier with a financial or investment advisor – are how your current earnings can carry you far into retirement.

Siegferth believes that an equally important aspect of long-term financial planning is having both a durable power of health (to allow someone to make medical decisions for you) and a durable power of attorney for financial decisions.

MAXIMIZE

A few changes in your 50s, such as adjusting investments and understanding the implications of early versus late withdrawal of Social Security benefits, can make a huge difference in financial security in later years, she explained.

Most people in their 50s are still working and are in the wealth accumulation phase, says Bill Hoover, president and CEO of Broadleaf Partners, a Hudson investment company.

Fifty-year-olds should continue to maximize their 401K accounts and invest with a balanced portfolio that includes stocks. A common mistake investors in this age group make is to lose focus on long-term investment objectives by reacting to headlines. The current drop in oil prices is a good example. Don’t sacrifice long-term investment goals to accommodate short-term shifts in the market, he adds.

Any age is a good time to truthfully evaluate tolerance for risk. If stock turbulence causes someone to lose sleep, then investments should be adjusted accordingly, Hoover pointed out.

KEEP

By the time someone is in his or her 60s, they usually are transitioning from employment to retirement. The goal with investment decisions is to preserve wealth and to supplement retirement income. An example may be to consider income investments such as bonds and dividend-paying stocks.

Hoover says that at any transition phase of life – marriage, kids, divorce, retirement, it is vital to work with a financial advisor to adjust to new needs and sources of income.

Most clients realize that retirement may last 25, 30 years or more. Wise investment decisions are crucial for meeting long-term goals.

MAINTAIN

The 70s are generally the age when conventional employment is over. Retirees rely on pensions, Social Security and investment income to meet and to maintain their lifestyles.

Hoover recommends that people in that age group in particular set aside spare cash to cover at least a year of living expenses. If there’s a downturn in the economy – remember 2008? – they don’t have to go through the painful experience of liquidating a portion of their investments to cover a drop in their investment income.

“A lot of retirees take monthly distributions from their retirement accounts so it’s a good idea during calm times to use any cash reserve to rely on during more difficult times,” Hoover says. “It’s a really easy sell but in practice it’s difficult. It makes it a lot easier to not panic during the market downturns because most of them don’t last all that long.”

 

About the author

Marie Elium joined Mitchell Media in 2015 as editor of Northeast Ohio Thrive, formerly Boomer magazine. A freelance writer for 45 years and a former newspaper reporter, she believes everyone has a story worth telling. She resides in Portage County where she grows flowers, tends chickens and bees and Facetimes with her young grandsons. Marie can be reached at [email protected]

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