Your fifties span a crucial decade when it comes to your money. You are close enough to retirement to see the light at the end of the tunnel, but it’s important you don’t take your foot off the savings pedal.
You may still have 10 to 15 years of work left, so there’s still plenty of time to fatten your savings to get the retirement you want. You’re also probably at a point in our career where you’re at the peak of your earning power.
These peak earning years often coincide with life circumstances that are optimum for saving. Your children are most likely (finally) on their own, the mortgage is paid off and household expenses are lighter than they may have been for decades.
So, how do you turn all this spare cash into even more cash?
Review your investment mix
Step back and take a bird’s eye view of your investments. Assess your portfolio’s asset allocation to ensure it aligns with your risk profile.
If your risk profile is higher, look at allocating your money to high-growth assets such as shares or property. And if you’re more risk adverse, exposure to lower-risk options such ETFs or your super may be a better option.
Review your portfolio annually and diversify across different asset classes to minimise risk.
Make additional contributions to your super
With big expenses such as home loans and education costs most likely behind you, think about allocating more spare cash towards your superannuation.
If it’s an option, consider salary sacrificing or making additional personal contributions to maximise your super, keeping in mind contribution caps and potential tax benefits.
Eliminate any personal debt
Aim to minimise, or preferably get rid of, any personal debt as you approach retirement. Being debt free upon retirement allows for more financial freedom and fewer interest payments.
This can be difficult if you’re still supporting adult children financially, so strive to strike a balance between helping them and securing your own financial wellbeing.
Re-evaluate insurance coverage
Health issues will naturally increase as you age, so your fifties are a great time to review your insurance policies, including life, health, and disability insurance, to ensure they provide adequate coverage for your stage of life.
You may need to adjust coverage amounts or add additional policies, if necessary, to mitigate potential risks and protect yourself against losing your nest egg to healthcare in retirement.
Spending a little more on insurance now can potentially save you thousands later on.
What other money moves would you recommend to someone in their fifties? What would you not recommend? Let us know in the comments section below.
Also read: Six biggest retirement financial planning mistakes
