In the first part of this series on Financial planning, MintGenie gave you a simple guide on the things that you can do in your 40s to help with your financial savings and investments.
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If you are in your 50s, you have lived a life. You have travelled and worked hard. You have a family and earn more than ever.
With the looming retirement years on the horizon, you may approach this period of life hoping to escape financial worry and enjoy a comfortable old age.
Keeping that in mind, we will look at the top things you should consider when planning your finances in your 50s.
Clear all loans and debts
The first financial aspect you need to consider in your 50s is debt. You wouldn't want to be concerned about debts, loans, and EMI payments in your 60s. As a result, it is advisable to pay off all types of debts such as home loans and car loans before retiring, as paying off loans with your retirement fund makes little sense. You may have taken out loans to help your children pay for their higher education. However, as soon as they graduate and begin working, you should pursue a loan transfer to your children to be debt-free. However, it is essential to make sure that you are not taking any debt.
Downsize expenses
Once you reach your 50s, there is a high probability that your financial responsibilities might decrease. It would be better not to indulge in luxuries as the financial obligations fall.
At the same time, you are getting a higher income. So, it might be easier to cut down on your expenses, modify your lifestyle, and put more money aside for retirement.
Also, you might want to reduce your children’s financial dependence on you. Your children can get a loan to buy a vehicle, plan for vacation and have a wedding, but banks won't offer loans to pay for your needs and medical expenses after retirement.
Boost your savings for retirement
You can boost your retirement savings as your expenses go down. It is seen that most people frequently underestimate the amount of money required to live comfortably in retirement.
Now that you are in your 50s, it is time to make the most of your resources to bulk up your retirement kitty. An ideal retirement plan should generate enough to replace your salary when you retire. As your earning ability peaks in your 50s, it might be easier to save more towards your retirement.
In short, your savings towards retirement should ideally rise as you progress through life. You will be in a great position if you save 50% of your income for retirement in your 50s.
Having a health insurance policy
Unhealthy lifestyles, growing pollution levels and sedentary lifestyles are major reasons behind people’s deteriorating health. These elements have a negative impact on people's health and, as a result, their finances.
Health insurance can help to take care of hospitalisation charges. Hospitalisation, pre-hospitalisation, post-hospitalisation charges, and ambulance expenses are all covered by health insurance. Health insurance policies are highly flexible, and policyholders can reduce their rates after a specific amount of time and change the length of their coverage.
It is recommended that you get health insurance early to avoid the inconvenience of having fewer policy options and benefits.
If you are above the age of 50, it might be challenging to obtain adequate health coverage and required options. However, there are health insurance firms that provide policies based on your health and medical history.
Star Health Premier Insurance Policy is a one-of-a-kind indemnity health policy for individuals aged 50 and up that covers the costs of hospitalisation. There are no pre-medical tests required to obtain this policy unless the insured has a pre-existing ailment, is undergoing medical treatment, or has disabilities.
Decide your post-retirement career
It is not a good idea to look for work after retiring. Now that you are close to retirement age, it's time to think about what you'd like to do next. It might be anything from a part-time teaching job at a local college to working for a childcare provider. You might also take any low-stress part-time work. A post-retirement job will not only keep you busy, but it will also help you pay your bills. However, your 50s are the ideal time to consider it and lay the groundwork for it. Before you retire, start networking with your co-workers and acquaintances to locate possible possibilities.
Conclusion
Your 50s is an opportune time in your life to get your finances in order and boost up your retirement savings. Many financial advisors recommend that people in their 50s should start thinking about how they will manage their finances once they do not have the income from a steady job anymore. Whether you are planning for retirement or want to continue working on a part-time basis, creating a comprehensive financial plan can help ensure your money goals are achieved over the long haul.
Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.
Follow the entire series on Financial planning here.