Personal Financial Plans for 50: Examples

As Americans approach retirement age, it is likely that they have a solid financial plan in place. Their kids are either out of the house or are about to be. They are well-established in their careers and are looking forward to retirement. However, there are a number of Americans in this age group that may need more financial preparation for life after their 50s. In fact, according to the Federal Reserve, only 40% of Americans in the 45-59 age group are on track with their retirement savings. If you are approaching your 50s or are already in it and aren’t sure what your financial goals or plans are, this article will provide some common goals that you should include in your financial plans, as well as some examples of how to address certain financial situations in your 50s, such as sending your kids to college. 

Establishing Financial Goals at 50

Congratulations on reaching your 50s! The term "golden years" is often used to describe these years of our life. What better way to enjoy these years than with a strong financial plan? Typically, when people reach their fifties, they have a clear picture of their finances. They begin to set specific goals to preserve their financial well-being for the future. In this section, we’ll look at some common financial goals for people in their 50s. In this section, we’ll look at some of the common financial plans for people in their 50s. 

Preparing for Retirement

Prioritizing creating a substantial retirement fund is vital as retirement nears. This involves evaluating and making the most of contributions to 401(k) or IRA retirement plans. It's a good idea to review your existing retirement plans, project your spending in the future, and consult with financial advisors to be sure you're on the right path.

Debt Reduction

Before retiring, many people in their 50s want to be debt-free. People might have better financial freedom during their golden years by concentrating on paying off outstanding debts, including mortgages, credit cards, and loans.

Education Funds

Saving money for your children's (or grandchildren’s) education might be a big objective if they are getting close to college age. You may lessen the burden of student loans and give your kids a head start in adulthood by setting up a designated college fund or exploring education savings accounts such as the 529 plan.

Health Care Preparation

Healthcare requirements rise as we get into our 50s. Planning for anticipated medical bills, purchasing long-term care insurance, or exploring health savings accounts (HSAs) can all help you better control healthcare costs and safeguard your financial well-being.

Estate Planning

It's important to have a thorough estate plan in place as you near your fifties. To guarantee that your assets are distributed according to your goals and to reduce estate taxes, this includes drafting or amending your will, appointing powers of attorney, and taking into account trusts.

Diversifying Your Assets

It's wise to assess your financial portfolio as you get closer to retirement and consider diversifying your holdings. A well-diversified portfolio can help you manage risk, safeguard assets, and look for growth possibilities.

Second Career or Entrepreneurship

Many in their fifties seize the chance to pursue a second job or launch their own company. About 3 in 10 entrepreneurs today are over the age of 50. Making a well-informed decision and establishing the groundwork for a venture that can both be personally meaningful and financially rewarding can be facilitated by evaluating the financial sustainability, market demand, and possible risks.

Example Personal Financial Plans

In our fifties, we should continue to invest in the future while also having fun with our families. Even though your financial strategy is probably sound, there is always room for improvement. This section will offer some examples of how to financially prepare for certain events if you don't have a financial plan and are in your fifties or rapidly approaching them.

Example 1: Maxine’s Dream Retirement

Maxine, who is 55, has always envisioned retiring at age 62 early to pursue her love of travel. She has $300,000 in her retirement account right now. Maxine's financial strategy emphasizes aggressive saving and investment tactics to achieve her retirement goal. Here’s her plan:

• Retirement Savings: Maxine makes catch-up contributions, meant for those 50 and older, and attempts to contribute the maximum amount each year to her 401(k) plan and takes advantage of her employer’s match program. She also intends to diversify her holdings by distributing a portion of her portfolio between low-cost index funds and bonds in order to achieve a balance between risk and return.

• Additional Income Sources: To boost her retirement savings and keep a consistent income stream during her early retirement years, Maxine intends to look into part-time employment options or freelancing in her area of expertise. This is a great way for her to maximize the amount of money she is putting into her retirement account.

• Budgeting and Reducing Expenses: Maxine will assess her existing spending and find places where she can make cuts in order to speed up her savings. She can focus those savings toward her retirement fund by cutting back on unnecessary expenses, renegotiating expenses like insurance policies, and finding ways to reduce her utility payments.

• Health Care Planning: For adequate protection and to reduce future healthcare expenditures following retirement, Maxine will compare and contrast several health insurance choices, including long-term care coverage and disability insurance coverage. She will also look into other coverages like life insurance to make sure that her loved ones are cared for in case of an unfortunate event. 

Example 2: Mark and Sarah’s College Funding Plan

Mark and Sarah are both 52 years old and have twin children who will attend college in six years. They want to create a financial plan to make sure that their children will receive a quality education without burdening them with student loans and hindering their own retirement plans. Here’s their plan: 

• Establish a College Savings Account: For each of their children, Mark and Sarah will set up a 529 college savings plan, to which they will make regular contributions in order to benefit from tax advantages and potential future growth. They will look at possible investment options inside each of these programs to maximize results.

• Create a Thorough Budget: Mark and Sarah will make a thorough budget and decide where they can cut costs in order to free up more money for college savings. They might consider moving into a smaller house or figuring out how to make more money through side jobs, freelancing, or other business enterprises.

• Research Financial Aid, Scholarships, and Grants: To fund their children's education, Mark and Sarah will actively look into and explore the scholarships and financial aid possibilities available for their kids. They will stay updated about deadlines and qualifying conditions to increase their chances of getting assistance. Additionally, they will motivate their kids to do well in school and participate in extracurricular activities to improve their chances of receiving scholarships to help reduce the cost of their education.

• Keep Track of Progress: Sarah and Mark continue to track the growth of the 529 plans and evaluate it in light of projected increases in the cost of a college education. They keep informed of changes in the price of education and modify their approach accordingly. They take the initiative to make sure their children have the resources they need to receive the education they deserve without having to take out student loans.

• Encourage College Savings Contributions: In order to teach their kids the value of investing in their own education, Mark and Sarah will involve them in the college savings process. They want to teach financial responsibility to their children by encouraging part-time work and saving habits. They will also encourage family members to contribute to their college savings plan for special occasions like birthdays and holidays.

Example 3: Jennifer’s Entrepreneurial Pursuit

Jennifer is a 58-year-old professional who has spent the majority of her career working a corporate job but has always had the dream of starting her own business. Her financial plan focuses on transitioning away from her career into entrepreneurship while safeguarding her existing financial security and assets. Here is her plan:

• Financial Feasibility Assessment: In-depth research will be done on Jennifer's business idea, including market analysis, financial forecasts, and start-up expenses. She can use this to assess the feasibility and potential profitability of her business idea in her business plan.

• Get Rid of High-Interest Debt: Jennifer wants to make sure that before she embarks on this journey, she gets rid of any high-interest debt she has. This includes small personal loans and credit cards.

• Building an Emergency Fund: Jennifer wants to have an emergency fund with at least six months to even a year’s worth of living expenses before she launches her business. This safety net will act as a cushion for her business’s early years when revenue can be inconsistent. This includes things like paying for her residence, the lease for her business (if necessary), and normal expenses. 

• Business Financing Options: For her new business, Jennifer will research a variety of financing options, including small business loans, crowdsourcing, and investor inquiries. To find the option that best fits her business model, she will carefully consider the terms and conditions of each one. Jennifer will consult a financial advisor to make sure she can accomplish her goals correctly and won’t bankrupt herself in the process.

• Continued Retirement Planning: Jennifer will not ignore her retirement preparation while pursuing her entrepreneurial dream. She will keep funding her retirement plans and make sure that her business endeavor complies with her long-term retirement goals. 

Hire a Financial Advisor

If you are in your 50s or are about to enter your 50s and need assistance accomplishing your financial objectives, working with a financial advisor can be a fantastic way to make sure that your future plans are as sound as possible. Expertise.com provides a list of the best local financial advisors online to help you reach your financial goals in your 50s and beyond. These financial advisors can help you establish and maintain a sound financial plan to get you back on track or to help you better prepare for the future, including retirement savings, putting up a college fund for your children, and creating a stock portfolio. Find the financial advisor of your dreams today and start preparing for your financial freedom!