5 Best Money Strategies for Boomers
If you are 50 or close to it, it's time to check in on your retirement planning
The beginning of a new year prompts many of us to start thinking about a personal-finance tuneup. But if you're 50 or older — a time when those vague retirement dreams are starting to coalesce into a hoped-for reality — it's crucial to take time to assess your finances.
Age 50 “is a turning point,” said Debra Whitman, executive vice president for policy, strategy and international affairs at AARP. “You’re really starting to look toward retirement,” she said. “You need to check in to make sure you’re on the right path.”
Here are five financial strategies for those in their 50s to consider, plus links to further reading:
1. Check your Social Security statement online. The Social Security Administration no longer mails annual statements, but you can review your expected future benefits by going to www.ssa.gov and creating an account.
You should do that both to confirm that Social Security is correct about your earnings history and also to see what amount you’re likely to collect each month. Knowing that dollar figure is a key piece in understanding how much you need to save on your own.
“It’s really important to get a true sense of what your Social Security benefit is going to be well in advance of retiring so you can have a sense of how much more savings you need,” Whitman said. “Social Security is really not very generous — average benefits are about $13,000 a year — and a lot of people don’t understand that.”
Also, check that the Social Security Administration’s records are correct with regard to your earnings history — if there’s a mistake, you could face reduced payments.
“Mistakes sometimes happen with people’s earnings statements, potentially leading to incorrect Social Security payments,” writes Jonathan Peterson in his book, Social Security for Dummies.
“These mistakes don’t happen very often, but they happen enough that you should pay attention to your own earnings statement,” he said.
His advice? On a regular basis, check the summary of your earnings history and if anything seems amiss, compare against your own records, such as pay stubs or tax returns, and, if necessary, contact Social Security to get the mistake fixed.
But, when you’re 50 or older, it’s time you created a written retirement plan, detailing where your income will come from, and how much money you’re likely to spend in retirement.
Some planners advocate a goals-based approach — you detail your goals, prioritize them and quantify the costs associated with each. For more on creating a goals-based plan, read "Money Moves to Make if You're Forced to Retire."
And check out this story for details on how to get started: "How to Start Your Retirement Plan."