I wrote an article about five finance things to do before hitting 30 sometime ago and I received a lot of feedback seeking financial advice for a slightly older group. This post is a little too close to home and this post will also speak to me personally to remind of the many things I need to work on as well.
By the time you hit 50, there are a few financial behaviors and things which should already be in place. But do not fret, people say that 50 is the new 30 – whatever that means. Fifty is still a relatively young age and there are many things to look forward to in the future. However, 50 is also a good time to do a good review of what you should be doing so that you can enjoy your coming senior years.
Here are some suggestions on finance things we should do and have before 50 – and yes, this list speaks to me as well:
1. Have a retirement program in place – I know I sound like a broken record (this euphemism can only be understood by people who are the focus of this post, haha!) about retirement planning… but seriously, one should already have a retirement program in place by this time and building on that plan must be accelerated, especially during these years. My friend and investment expert Efren Cruz advocates the 20/20 retirement rule, which is: For a 20 year retirement, you should start preparing 20 years ahead.
- If you plan to retire at 60, you should have started at 40.
- If you have not yet started and you are nearing 50, start one immediately and prioritize building your retirement program.
Speak to a financial planner (preferably a Registered Financial Planner) and look for ways on how to build enough funds to live a comfortable retirement. Pooled funds that are equity laced such as mutual funds or UITFs are great ways to build retirement funds. I recommend quantitative plans for retirement which will help guide you.
2. A flourishing career or business – When young people go to me for career or business advice, I often tell them to be adventurous, try new things, and don’t be afraid of risks too much. I tell them that they are bound to find something that they will like to do and be successful at it.
However, someone who is nearly hitting 50 should have a more stable outlook of what he is doing and what he should be doing in the coming years. When I hit 40 a few years ago, I was placed on a crossroad concerning my career – I felt that it was the right time for me to make a decision then because 40 is a good time to make changes and adjustments to one’s profession and vocation. There is enough experience to build wisdom at 40 and yet many more years to re-align my future. I am not saying that 50 is too late of an age to make major changes in career & vocation – there are famous people who started flourishing careers and enterprises much later on in their lives. But, doing major changes at this season may be a tad more risky as compared to ten years earlier. For major career & vocation changes, think and pray hard about it first before jumping into uncharted territory.
3. Balanced asset portfolio – This is the time to start building on liquidity as many of us may still be totally enamored on hard assets like property at the expense of liquidity. Real estate is great for capital build-up and even cash flow but always ensure that a healthy balance of liquid and non-liquid assets are in place. This may also be a great time to re-balance your portfolio with regard to risk; younger people tend to take in a lot of risk, which is fine because they have more time to recover should there be any capital loss. But hitting 50 means you are closer to retirement so it may be a good time to start scaling down your risk a little bit. However, this does not mean that you should stick to low risk instruments already because there are still many more years before you start living on your assets and you can take the next decade or so as an advantage to build more capital. Balance your risk but don’t totally avoid them. Diversification is still important regardless of age.
4. Life insurance – Yes, we still need life insurance and maybe even more so. People in this season still have dependents and the risk of untimely death can totally thwart all your hopes and dreams for your family. Unfortunately, premiums begin to rise steeply at this age group and insurance companies will require more proof of insurability at this age. A good gauge of coverage will be about 5x your annual income or you can consult a financial planner to help you ascertain your insurance needs. Risk management is just as important a concern at this season as it was when we were younger. Life insurance will also come in handy as a source of funds to settle estate tax requirements in the future. Consider having health insurance riders to your insurance policies as well.
5. Invest in memories – Yes, this isn’t totally a finance thing but I do encourage those hitting 50’s not to scale down on time spent with family as others typically do. Children of the late 40’s to 50’s are now getting older and some parents feel that their children want to spend less time with them. I beg to disagree – it is always a good idea to spend quality and quantity time with our kids even if they are entering adulthood. Our guidance, wisdom, and love are even more needed at this season of their lives. Spending time with them ensures that they will have better chances of success and happiness. Spending more and more time with your spouse is also a great idea, no matter our life stage. Remember, our children will eventually leave us but our spouses will be with us to our last breath so let’s invest in good memories that will last a lifetime.
I’m sure there are more things to take care of but the five things I mentioned come on top of my mind. Fifty is still a young age, we have two or three decades more of life to enjoy. Taking care of a few things today will ensure a bright and happy future ahead!
Image used under Creative Commons from Steven Iodice
Randell Tiongson is a columnist for the Philippine Daily Inquirer, Author of the best-selling books No Nonsense Personal Finance and Manifesto and a personal finance trainer. Follow him at Facebook, Twitter and Instagram (@randelltiongson) or visit his website at http://www.randelltiongson.com
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