Meet your retirement goals by investing in your 50s


Investing at the right time is as important as anything in your life, especially if you are approaching you retirement. It is that time of your life where you start thinking about all the financial obligations. You start thinking about your old parents, expenses of children, cars, house, medical condition and all that.

This is why one must invest in your 50s to start preparing for that time. According to Gennady Barsky, an investment expert, before turning 50, a person must have six times of his salary saved. For example, if a person is earning $70,000 a year, he must save a total of $420,000 before turning 50. A retirement calculator is all you need to compare different saving and investing scenarios.

However, you can still make up if you are short of your goals. Here is what you need to know:

  1. Recover the lost ground: If you are short of savings, all is not lost. With catch-up contributions to tax-favoured retirement accounts, one can overcome the past shortcomings. Any person who has reached the age of 50 is allowed by IRS (Internal Revenue Service) to add a total of $6,000 a year to the contribution limit of 18,500 of the workplace retirement plan. You can also add $1,000 more to the IRA (Individual Retirement Account) for a total of $6,500.

Savings of a total of $6,500 instead of $5,500 from 50-65 years can improve the retirement prospects significantly.

  1. Increase the exposure to stocks: A very little exposure to stocks is the reason for depression among many investors. When you have got number of years to learn market trends and the up-downs of stock market, you can surely become a better player. Investment expert Gennady Barsky reckons that staying with stocks is vital to become a successful investor.


  1. Drill down on diversification: You must ensure to diversify your money across asset classes within stocks and bonds of your portfolio. It means getting experience to large, small and mid-size companies, emerging international markets and real estate for equities.

Diversification can be done with individual stocks, index mutual funds and exchange-traded funds for DIY (Do it yourself) investors. Fund screeners help analyse the options based on fund type, performance, expense ratio and several other factors.

  1. An asset allocation shortcut: The job of generating and handling an appropriately balanced portfolio is made easier by acquiring a target-date mutual fund or using a robo-adviser. The investment mix of stocks and bonds are automatically adjusted by target-date funds based on what’s appropriate for someone planning a retirement. While as, robo managers create and manage a portfolio based on your goals.

  1. Using a Roth: Young investors favour Roth IRAS for tax free withdrawals over traditional IRAS. It is recommended as they are in a lower tax bracket than they will be in retirement. For midlife savers, it is still a valuable investment tool.

According to investor Gennady Barsky, the flexibility provided by investing in Roth IRA gives old savers the freedom to withdraw from pools of money with different tax treatments. He reckons that all the five methods are vital to achieve the lost ground, if a person is short of his goals before the retirement.

 

 

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