10 Things You Need To Know About Your Money-Part 2
This article was written by Rebecca Reisner Posted on Jun 25, 2014 I found this at LearnVest
6. Your life insurance needs may change
If your children are grown and independent, and if you have enough savings to provide for a spouse in the event of your death, you may decide that you no longer need as much term-life insurance coverage as you used to have, or you may need it only for a shorter period of time.
“In [your 50s], some of the heavy living expenses that life insurance provides for families in case of a premature death are lessened at that age,” Roberts says, so it may be a good time to reassess what costs you’d need insurance to cover.
That’s for term life insurance. Permanent life insurance—like a whole life policy, for example—has an added investment component that could potentially grow in value, and which you may be able to borrow against. Whether you decide to keep that type of policy will probably depend on whether you still see value in it as an investment vehicle, says William Bregman, a CFP® who practices in New York City.
For most people, however, term life insurance may be sufficient, and you can get coverage up until age 80. Whole life insurance generally is more often used if you’re concerned about estate taxes or want to leave behind a legacy for your family. Because permanent life policies are often more difficult to understand—and usually carry higher premiums—it’s important to consult with your insurance agent or a CFP® to determine whether a permanent life policy makes sense for you.
7. You don’t have to worry about Social Security collapsing
Yes, the Social Security Administration has stated that, by 2035, taxes will be able to cover only 75% of scheduled benefits. But older Americans have a brighter Social Security future than their younger counterparts. “Confidence that Social Security will continue to provide benefits that are at least equal to today’s value is higher among workers ages 45 and older than among younger workers,” according to EBRI’s 2014 Retirement Confidence Survey.
Why? Because even small tweaks to Social Security [policies] could secure it well into the future, according to Sylvia Allegretto, a labor economist with the Institute for Research on Labor & Employment at University of California, Berkeley. “Before the first Social Security check went out, people called for its demise, said it would fail,” says Allegretto. “Yet not one person has ever had a missed Social Security check.”
8. Retirement doesn’t mark the end of your career
Even when you call it quits from your current job, your knowledge and experience could still be in demand—and help earn you some additional money in your later years.
“I’ve had some nice good-news conversations with a client in his 60s, who found out he could retire right now if he wanted,” says Roberts. “He’s in the engineering profession and could easily do some additional consulting, which could add to savings.”
Indeed if you’ve had a long career in the knowledge sector—accounting, medicine, law, etc.—you could very well extend your working years with a consulting side gig. According to 2013 data from the Associated Press NORC Center for Public Affairs Research, 82% of Americans over the age of 50 expect to work in some capacity after retirement.
9. You can contribute more to retirement than you used to
Feel a little behind in your retirement savings? The good news is that turning 50 means you’re eligible to make a “catch-up contribution” of $5,500 to your 401(k) plan. That’s over and above the $17,500 that the IRS allows anyone younger than 50 to contribute to a 401(k) now.
You also get to play catch-up with your IRA too—you can contribute an extra $1,000, for a total of $6,500.
“At 50 you can still take great advantage of compounding interest in your retirement portfolio.”
10. It’s never too late to save for retirement
“At 50 you can still take great advantage of compounding interest” in your retirement portfolio, says Roberts. He notes that while you may have a different asset allocation than you would have had at, say, 30, the fact is that compound returns take effect no matter when you start.
LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc. that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Unless specifically identified as such, the people interviewed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services, and the views expressed are their own. LearnVest Planning Services and any third parties listed in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.