Achieving Financial Freedom in Your 50s

Your 50s typically represent your peak earning years, making it the ideal time to get your financial affairs in order and take action to achieve financial freedom at retirement. With a bit of planning, and the support of a CERTIFIED FINANCIAL PLANNER® professional, you can identify the gap between your current financial situation and your goals, and then set yourself on the road to financial freedom.

Get Your House in Order

It’s important to take proactive financial steps now, such as eliminating debt including credit card debt and any other significant debt that could get in the way of arriving at your retirement savings number (the amount of savings you will need to cover your projected retirement expenses). Request your credit report and review any outstanding debts you might have. You want to make sure nothing will impede your financial stability during your retirement years.

If possible, prioritize paying off your mortgage and any other large financial obligations that consume a significant portion of your cash flow. Remember to allocate funds for emergency expenses and create a travel fund if that’s important to you. Consider a plan to increase your income, through part-time or side work, while lowering your expenses.

Check your Social Security benefits to understand how that will supplement your retirement budget.

If you are a business owner, ensure you have a succession plan in place.

Think of Your Family

Determine your partner or spouse’s contribution to their retirement plan and strategize how you can complement each other effectively. For example, if your spouse is employed and you are a business owner, consider maximizing their employer-sponsored retirement plan contributions. Simultaneously, ensure you have your own retirement savings plan, if you haven’t already, to optimize your combined financial retirement readiness.

If you have college-bound children, consider supplementing their education rather than fully funding it. Remember: You can borrow for college expenses but not for retirement. Have an open conversation with your children about financial expectations for their education.

Also, consider sharing a breakdown of your family’s expenses by percentages with your family members and dependents. This can help identify where to reduce expenses and increase savings.

It’s also important to update beneficiaries for your retirement accounts and review your estate plan. Take the opportunity to update your will, health care directive and power of attorney to ensure they reflect your current wishes and circumstances.

Get All Your Perks

Take advantage of all the benefits available to you now that you’re in your 50s — you’ve earned it! For example, in your 50s, you can qualify for several financial benefits such as AARP member discounts and making catch-up contributions to your 401(k), IRA and HSA accounts.

Consider converting your IRA to a Roth IRA if your current tax rate is lower. After you pay taxes for the conversion, you'll benefit from tax-free withdrawals during retirement.

Your 50s are the perfect time to put your financial house in order in preparation for retirement. Working with a CFP® professional can help you create the plan and foundation you’ll need to enjoy the financial freedom you envision. Visit LetsMakeAPlan.org to find a CFP® professional near you.