When you hit your 40s and 50s no one wants to talk about retirement. Retirement once felt like it was a long way off … now it feels like a cop car zooming up behind you in your rear view mirror with its lights flashing. We hate to state the obvious, but retirement is coming. The good news is: you’re not too late. Not at all. If you aim to hit some of these money milestones for your 40s and 50s, you’ll do just fine. But if you really do see flashing lights in your rear view, you’re on your own.
A lot of people, of varying ages, don’t like the word “retirement” so we suggest you think of it as a “future-spending plan”. You are working hard now to spend in the future. You are setting aside funds now to live a good life and help others so you need a plan to make sure you can do the same in the future.
At some point the paychecks will stop. We’ve heard a lot of people say, “I’m never going to retire.” But that may not be your choice. Different circumstances, i.e. bosses, health, market conditions, may make that decision for you.
But if you plan now, you place yourself in the driver’s seat of your future. You’ve worked hard to get this far. Set aside some funds now so you can call the shots and enjoy yourself and help others when you retire.
The 40s (and 50s) are a critical time to discuss and buckle down on retirement savings. Your 40s will, most likely, be your peak of income earning power. So now is the time to address your future.
But we realize it is also a very busy time of life. Some parents in their 40s are sending kids to college which is a very expensive proposition these days. But don’t lose sight of your future. You can’t take out student loans to get a hip replacement or take a cruise.
Some people at mid-life feel like it is too late to save for retirement. But the reality is if a 40-year-old with zero retirement savings starts saving $650 a month that 40-year-old saves about a $1 million by age 67. That amount is about 15% of a $50,000 annual salary. That’s great news for most. It’s not too late for you.
But now is the time to pay attention. Make these 5 money milestones for your 40s and 50s a goal, and you’ll do just fine:
1. Write out your 3 W’s.
Planning for something is easier to accomplish if you have a vision for where you are headed. We think you can start to construct a fairly good vision of your future by discussing the 3 W’s with your spouse.
Where are you going to live?
What are you going to do with your time and talents in retirement?
Why – what is your purpose in retirement?
Think through those three big ideas now to create your vision for your future. You don’t need to decide it all in one sitting. And you may find you don’t see eye-to-eye on all your answers when you first begin discussing it. Better to figure out that now than later.
You have a long time to be retired with your spouse.
Experts say if you make it to the age 65 you have a greater chance of making to 85 than you did of getting to 65. So plan for more years than you may be thinking.
2. Get real.
Get an accurate picture of where your finances are right now. You need to know where you are now to know how to get there from here. If you wanted to get to New York, but you don’t know that you’re in Colorado that will be difficult. But if you know where you’re starting from then you can figure out best way to get to New York.
Looking at your financial reality can be scary and messy. You may not even know where all of your information is, but make a promise to each other to figure it out.
Do it now. Invest the effort right now to see exactly where you are. If you have a financial planner, call for an appointment today. Rip the Band-Aid off. The conversation at 50 years of age is critical. You have time to make changes. But no one can plan a future without knowing where you are now.
3. Set specific goals.
Take some time to set specific goals. Work backwards from the 3 W’s–where do you want to be when to do what.
Clear goals help support your vision. Begin the discussions about what you will spend your time doing in retirement. Do you want to start a nonprofit or ministry? Travel? Take classes? Live near grandkids?
Make sure you’re sharing your goals with your spouse or if you’re single, share them with a close friend. We even set a goal with a dollar amount so it’s more tangible for both of us to work towards. We like to talk about the progress we are making to make our future happen.
One of our specific goals is for each of us to pick two places to live. Scott wants to live in a town north of Florence for a few months and then downtown Manhattan for the same amount of time. He wants to experience New York and run in Central Park every day.
Our retirement dream may be totally different than yours, but don’t keep it a secret. We’ve been talking about our goals for last ten years.
We have some handy calculators that can help you work towards some specific numbers. Grab one of those or one from online, write your goals down, and make it happen. This can be fun.
4. Stay relevant.
We think an important milestone for those of us in mi-life is to stay relevant. Learn new things. Stay interested. Continue to invest in relationships with younger people.
We watch the grandparents right now that took the time to figure out how to text, and Face time their grandkids. That’s awesome! Stay connected. Learn how to use new technologies as they come along.
5. Hunt down every retirement plan you have.
Recall everywhere you’ve worked and determine whether you had a retirement account with them. There are a lot of retirement accounts that go unclaimed. Exactly how many accounts isn’t known, but PenChecks Trust estimates the number is in the billions. In 2017 alone, they paid $35 million to more than 15,000 missing participants.
We know of teachers who have worked in multiple states and forgot to claim their retirement from former positions. Double check that you don’t have retirement plans scattered around and account for all your hard-earned dollars.
Bonus: While you’re at it, double check your social security benefits. Go to the Social Security website at ssa.gov and register yourself. From there you can check out your benefits or spouse’s. Look through your social security information and make sure it is credited right. Social is averaged over lifetime so if they toss a zero (which they inaccurately did for Scott’s in 2009) in it can greatly affect the monthly estimated payout.
Take heart. We know life is expensive and finding additional funds to set aside isn’t always easy, but use some of these milestones to encourage you to pay yourself back in your retirement for your hard work now.
Be glad you’re doing it together. Make some compromises as a couple, invest in your future, and make it fun.
Make it happen!