Donavan Group Consulting in Singapore and Tokyo, Japan 6 Tips for Keeping Your Retirement

Donavan Group Consulting in Singapore and Tokyo, Japan on 6 Tips for
Keeping Your Retirement on Track at Age 50
When it comes to preparing for retirement, 50 can be a
pivotal age. At that age, most people are just 10 to 15 years
away from leaving the workforce, and time is relatively
limited to save for retirement.
But with a decade or more of work still remaining, you
have enough time to make changes to your retirement
savings strategy to ensure you reach your savings goals.
"Add up all of your life savings—your 401(k), your
investments, the money under the mattress—and then
divide that by 25. Could you live on that amount
comfortably for one year?" asks David Rae, a certified
financial planner and founder of DRM Wealth
Management. "If the answer is yes, then you may be on
track for retirement. If its no, it's time to sit down with a
fiduciary financial planner to figure out what else you can
do to secure your financial future."
Rae's formula of dividing by 25 is based on the assumption that people will withdraw about 4% per year from their
retirement funds to live on after leaving the workforce.
With that in mind, here's a look at what retirement and personal finance experts say you should do at age 50 to maximize
the likelihood of achieving your retirement savings goals.
1. Maximize Current Retirement Contributions
Maximizing your current retirement contributions is a common tip offered by advisers. It's one of the easiest steps to take
to help increase the amount of money you're saving.
You can max out contributions to both personal IRAs and company-sponsored 401(k) plans.
"Starting at age 50 you're eligible to increase your 401(k) contributions by an additional $6,000 per year, and can increase
contributions to IRAs or Roth IRAs by an additional $1,000 per year," says Matt Hylland, a registered investment adviser
at Hylland Capital Management. "At age 55 you're eligible to save an additional $1,000 per year in a health savings
account, which is a great retirement savings vehicle."
2. Consider Limiting Your Tax Exposure
There are fewer tax breaks on the horizon as you get closer to retirement, says Wayne Fisher of Fisher Financial Tax &
Insurance Solutions.
If you're saving money in a government-recommended retirement plan such as a traditional IRA, 401(k), or 403(b), you'll
eventually have to pay taxes on that money—and the tax rate may be much higher than you expect.
"Per David Walker, the former US Comptroller General, we're heading to a future where we'll have to double federal taxes
or cut federal spending by 60%, which makes tax-free look pretty good, right?" says Fisher.
3. Carefully Evaluate Asset Allocation
As you reach age 50 and beyond, many advisers say it's time to start reducing the risk in your investment portfolio to
protect it from market declines.
"Depending on your risk tolerance, you may want to look at adding bonds, annuities, CDs, or other safer options," says
Hylland. "As you go through your fifties, the chance of your portfolio having time to recover following a major decline will
decrease. By having safe investments, you can ensure that your equity investments have time to grow and recover if
needed."
4. Drop Unnecessary Insurance