If you are in your 50s you may feel as though you don’t have much time to accumulate wealth. In reality you probably have a lot more time than you think. That means you can have far greater financial security if you play your cards right. What does “playing your cards right” mean?
For starters, it means having a plan. I spoke about the importance of having a financial plan in the post I wrote for people in their 40s. If you are in your 50s, the value of having a financial plan is exponentially greater.
You simply must know what it costs you to live and how you are going to generate that income when you stop working. Of course this is crucial for retirement planning. But it’s even more important for those still working. What happens if you find yourself “suddenly unemployed”? You may have planned on working another 10 or 15 years but your boss may have other ideas. If you are in your 50s and get fired it can sink your financial plan completely. That’s because it will be harder to find a replacement job.
This risk is often overlooked but I urge you to do your homework. That includes having a plan and tracking your current spending. This way, if the worst does happen, at least you’ll know what you are up against.
Pare Down
Whether you like it or not, retirement is closer than you think if you are in your 50s. In many (though not all) cases that means you’re going to have to make due with a little less income. Why not start getting ready for that day by reducing your economic footprint now?
It makes sense to start practicing living on less now. When you think about it, you’ll see that there is no downside to doing this, is there? Look through your spending and carefully evaluate every single expenditure. Are you spending your time and money optimally? Remember, when you say “yes” to one thing, you say “no” to something else.
For example, if you shell out $500 a month dining out, no problem. But realize that it adds up to $6,000 a year. Is it worth it? That $6000 could pay for a pretty awesome trip. What are your priorities?
Just remember that even though your resources are limited, you still have choices. Make the most you can of the time and money you have friend. Life is not a dress rehearsal.
Of course the work you did above tracking your spending will help you. But your financial plan is also an invaluable tool that can really help you see the big picture.
- Do you still own life insurance? Do you really need it?
- Are you helping your adult children? Do you/they realize the real cost of this?
- Do you still need that big house you live in? Would you be willing to downsize if it meant you could retire early and do more traveling?
- What’s important about money to you? What do you want the rest of your life to look like? What do you have to do in order to achieve that?
These are the big questions that we rarely consider because day-to-day life gets in the way. I know this first hand. But when we enter our 50s it really makes sense to focus on finding our answers. We ain’t getting any younger.
The good news is you probably don’t have to rob a bank or inherit a fortune from Uncle Fred in order to juice a lot more out of life. I’ve found that once we get crystal clear on our priorities it’s easy to see how to rearrange how we spend our time and assets in order to live more fully.
If you are in your 50s, what has been the most effective change you’ve made in your financial life? What do you most with you’d done differently starting 10 years ago?
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