By Cristin Rigg, CFP®, CDFA®
Personal Wealth Advisor

For women the world over, turning age 50 is a milestone event. It’s often a transition point when nests empty, careers change and priorities shift. This can inspire a decade of renewal with opportunities to focus on you and greater freedom to do what you want.

That’s the beauty of getting older! If reaching the big Five-O triggers a desire to reflect on your life and consider the road ahead, you’re not alone. It’s the perfect checkpoint to see if you’re on track to meet your life goals. Following are five financial milestones that can help you build wealth and live life on your terms:

1. Close in on your retirement savings goal
At age 50, retirement becomes real for many for the first time. With 15 – 20 years to go, this is a great time to assess your retirement outlook. If you’re aiming to maintain your current lifestyle, you’ll need a level of savings to match. At this point in your financial journey, you should aim to tuck away roughly six to nine times your annual household income.

Here’s a hypothetical example from JPMorgan’s Guide to Retirement: if you currently bring in $200,000 annually, your retirement account balance should be nearing $1.4 million (7.1 X $200,000) at age 50, with the goal of hitting approximately $3 million at age 65 – a savings total that is meant to last approximately 30 years.¹ Of course, the estimate for how much you’ll need may evolve between now and retirement, but this example gives you an idea of how to measure your progress and assess if your retirement strategy should change.

2. Minimize debt
About 77% of families headed by individuals age 55 and older hold debt with an average total of $76,679 in 2016, up more than $1,300 from 2007, according to the Employee Benefit Research Institute.² If you don’t like the idea of carrying debt with you into your golden years, make trimming down debt a key goal.

A good rule of thumb is to devote no more than 36% of your gross household income to paying down debt (mortgage, car, credit cards and student loans), with no more than 28% of that going toward home-related debt. Keep in mind that some types of debt can be beneficial and actually improve your overall financial picture, such as a mortgage or home equity line of credit, which can have tax advantages.

5 Milestones - Woman on beach at sunset3. Define your transition strategy
Planning for the next phase of your life and transitioning out of your career is an important step to ensure you’re ready to retire on your terms. And, it’s not just about being financially prepared.

It’s more about the big picture and defining what retirement looks like for you. Think about the life you want to lead and what you want to do. Do you want to focus on your charitable efforts, explore a new hobby or travel? A move might even be in the mix or other new adventures. Write it all out. You could even try “practicing” retirement. Take a long weekend or vacation and explore some of the items on your list. After all, some of your post-career endeavors may require building connections, a new knowledge set or extra resources, all of which need to be factored into your financial plan. Aim to paint your full retirement picture by your mid-50s or earlier and craft a transition strategy to support it.

4. Plan for longevity
We all know that people are living longer, but many underestimate the years that they need to save for and risk falling short during retirement. Furthermore, women outlive men by 5 – 8 years on average, so consider building a few years of extra savings.³

Another component of planning for longevity is factoring in healthcare costs and insurance needs. It’s a top concern for affluent retirees, and 75% say they’re “terrified” of how healthcare costs may impact their retirement savings.4 Thus, take some time now to understand the ins and outs and plan accordingly. Enlisting the help of a financial advisor may be worthwhile and can give you peace of mind on the issue.

5. Protect your legacy
This is a biggie, but one of the most straightforward of the five milestones. You can protect your legacy and assets with an estate plan. The underlying goal of this activity is to provide your family with essential information that can help guide them through a difficult time. It can also give you control over what happens to your money and property.

Start by getting your estate planning documents in order. These typically include a trust, will, durable power of attorney and an advance healthcare directive. Life insurance is another important consideration. If you already have a policy in place, it’s still a good idea to review it regularly to ensure its up-to-date and meets your needs based on your current situation.

Turning age 50 is undoubtedly momentous and can serve as a threshold to new horizons. We challenge you to make these milestones a focus. We’ve seen the benefit of this firsthand while working with our amazing clients over the years. Connect with us if you’d like an outside perspective on potential changes that might help you to make the most of your money and retirement plan.

Sources:

  1. JPMorgan. Guide to Retirement. Retirement Savings Checkpoints. p 13. https://am.jpmorgan.com/us/en/asset-management/gim/adv/insights/guide-to-retirement
  2. Employee Benefit Research Institute. Debt of the Elderly and Near Elderly, 1992 – 2016. March 2018. https://www.ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=5544
  3. BlackRock. A Today and Tomorrow Guide for Women Investors. https://www.blackrock.com/investing/insights/shareholder-magazine/summer-2016/financially-fit-women-investors
  4. PR Newswire. Even affluent Americans are concerned about health care costs and their impact on retirement plans. June 26, 2018. https://www.prnewswire.com/news-releases/even-affluent-americans-are-concerned-about-health-care-costs-and-their-impact-on-retirement-plans-300672245.html