Turning fifty is a surprise for many people. With the pace of life so busy these days, time flies by with frightening speed. When you’re busy working, raising kids and taking care of a house it means there’s some demanding task filling every idle moment. For most people it’s not until the kids start college that they can catch a breath and wake up to the fact that they’re in their fifties. It’s one of the more depressing wake-up calls you get in life.
That sudden quiet carries with it the realization that retirement is just around the corner. Hopefully that realization comes while you’re still working and not when you’ve been hit with a sudden layoff in your fifties which is a career death sentence for most people. Either way, it’s time to make changes to gear up for retirement.
Think About a Sideline Business
Young people are working two and sometimes three jobs to make ends meet these days. While that’s easier for kids, you may want to take some of your extra time and start working up what’s commonly called a sunset career. Having your own business puts the decision of when you retire squarely in your own hands and hedges against the possibility of a layoff late in your career. A sideline business should be something fun that you enjoy doing and brings in additional income that you can add to your retirement savings. Not only will you have extra cash, but you have a fall-back job in case of a layoff.
Ramp Up Your Retirement Savings
The government actually helps out over-fifties on this one by allowing you to supercharge your savings with catch-up contributions. Catch-up IRA contributions are not quite like free money but it’s as close as it gets. In your fifties you’re probably at or near your peak income anyway and it’s a time when your kids’ college expenses are declining—an opportune moment to be socking extra cash away and topping up your retirement savings.
Downsize Your Home
With the kids out of school and out on their own, do you really still need that big house? You may be thinking about holidays with family and grandkids, but a nearby hotel room for guests is a lot cheaper than maintaining a big house you’ll only use once or twice a year. If you’ve been in the same home for ten or twenty years, then you’ll have a sizable amount of equity and downsizing could be a smart money move. You may not want to go to the extreme of trading in your home for an RV but, now that it’s just you, or the two of you, you have the opportunity to think way out of the box when it comes to housing.
Pay Off Debt
One of the worst things you can do at this point in your life is taking on a home equity loan or new debt. It might be tempting to buy that big boat or vacation condo but you should be minimizing debt at the same time you’re increasing contributions to your retirement savings. It’s tough because at this point in their lives a lot of people feel like they’re due a bit of indulgence. You’ve sacrificed for career and family and, for many, this is, literally, the first time there might be “extra money” for yourselves.
That’s why having a retirement plan can keep you on track. Buying a lavish motorhome or big boat might be okay if you’re planning on living in it. That vacation home might be a good investment if you’re planning on making it your primary residence.
Just keep in mind what happened in 2008. Millions of Americans on the verge of retirement woke up one day to find their retirement investments all but wiped out and, if they owned a house and vacation property, they were stuck with real estate they couldn’t even sell at a loss. Nobody back in those days thought it could happen or saw it coming. Don’t get caught in the same trap. Recessions can and do strike suddenly and with depressing regularity. A little frugality now means you won’t have to worry about working until you’re seventy later.