Planning For Retirement At 50
The median income for households headed by people in their 50s was just under $64, 000 in 2007, according to the latest Federal Reserve Survey of Consumer Finances. Median net worth was $229, 300, up from $133, 100 for people in their 40s.
Although 85% of 50-something households reported owing money, the median amount was just more than $85, 000, compared with nearly $100, 000 for those in their 40s and $110, 000 for those in their 30s.
Less than 4% of 50-something households have a negative net worth, compared with 6.3% of households headed by those in their 40s and 11.5% of those in their 30s. Only 5% of 50-somethings were 60 days or more late on a bill, compared with a peak of 9% for households headed by 30-somethings.
Of course, dangers abound. Recent sharp losses in retirement funds and home equity have many in their 50s worried about the future. High debt levels still can cripple finances, as can illness, disability or layoffs. Poor planning, insufficient insurance protection and boomerang kids (adult children who return to live at home) pose additional risks.
By making some crucial decisions now about timing your retirement or where you might live, you'll be better able to map out your plans.
If you want to get yourself in the best financial shape possible at this milestone, take the following steps:
Reconsider your career
Most baby boomers say they want to work at least part time in retirement. Work can have social, emotional and especially economic benefits: The longer you're employed, the less you need to save for retirement.
But what if you hate your job or your industry is downsizing rapidly? (Think newspapers, retailers and U.S. auto manufacturers.) You can wait to get fired, or you can figure out what you'd really like to do when you grow up and see whether you can get there from here. A session with a career counselor could help; so could that venerable career changer's guide,
Beware the temptation to pitch it all and go back to school for years on borrowed money, however. You're unlikely to recoup the investment, and you could end up saddled with student loans in your 80s.
If you need additional training, night school paid for out of your current income or via federal student loans is usually a better bet. If you're dying to start your own business, do it as a sideline first to see if you can make your idea fly.
Put retirement on the front burner
Sure, you've got other obligations. You may still have kids to raise and educate (45% households headed by 50-somethings include minor children), and your folks may need financial help as well.
But saving for your retirement still needs to be your priority. Those trashed retirement accounts need to be rebuilt -- and rebalanced so that you're not taking too much or too little risk.
You're also close enough to the finish line now the median retirement age these days is 62 that you should begin to make definite plans about where you'll live, what you'll do and how much money you'll spend. If you don't have a specific age or date in mind, try several scenarios using MSN Money's retirement planner by Liz Pulliam Weston.
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