With the children out of the house, you can make retirement planning the focus of your financial strategy. Maybe you're right on target or maybe you have some "catching up" to do. Either way, consider these tips to ensure you're on track:
Look at the big picture with a financial planner. Before planning your retirement date, see a financial expert and get a comprehensive perspective on your whole financial situation to determine if everything is in order.
Don't tap into retirement to pay your children's college expenses. Your children have several options to help pay for college, but you have few to help pay for retirement.
Maximize tax-deferred accounts. One way to catch up on retirement savings: make "catch-up" contributions to your IRA or 401(k). Once you've reached 50, you're allowed to contribute more tax-deferred dollars to those accounts, so take advantage of this.
Invest in growth. 50-50% of your investment portfolio should be in stocks and the remainder in bonds. Within ten years of retirement, keep that same mix but change the types of securities you own to reduce your risk a little. Avoid paying a lot in taxes during these peak earning years by making full use of tax-deferred savings vehicles including 401(k)s, IRAs and variable annuities.
Review your estate plans every few years and update as needed. This includes your will, trust, power of attorney and medical advance directive.
Assess life insurance needs. Term and permanent life insurance are expensive at retirement age, but a life insurance policy may be necessary for estate planning or other purposes.
Think about getting long-term care insurance or other additional insurance to supplement baseline Medicare coverage. It's unsafe to assume the government will cover most healthcare costs, so be prepared with insurance. It is expensive, but making the purchase when you're in your 50s will help you avoid even higher rates.