Gen X Turns 50: What That Means for Retirement PlanningSubmitted by MIRUS Financial Partners on November 30th, 2015
Gen X is used to being the younger generation. Growing up in the shadow of the Boomers, Gen X-ers were, for decades, considered the cooler, more skeptical generation. So how can the generation that grew up with MTV and “Reality Bites” possibly plan for retirement?
After so many years of felling like the young kinds on the block, it’s understandable that Gen X-ers might be a little behind in retirement planning. And nothing sets off the pre-retirement jitters like a 50th birthday party. Are you saving enough? Are your savings invested correctly? How will you possibly have enough saved to stop working in 15 years?
Should You Re-balance Your Assets?
Turning 50 is a great excuse to meet with your financial planner (or to finally start using a financial planner) to find out if it’s a good time to rebalance your portfolio. At 50 you have a pretty good idea of where you’re income in coming from and where it’s going. It’s a great time to look at your asset allocations for your retirement nest egg to determine whether you need to change your asset allocation. As you get closer to your retirement age, you may need to choose investments that are less risky, as there is less time to recover investment losses.
Are You Taking Advantages of the IRS "Catch Up" Expectations?
You may already be enrolled in a 401(K) plan. The good news for those turning 50 is that the IRS says you’re now eligible for some special “catch-up” exceptions. Most workers are limited to contributing $18,000 per year in a 401(k), but if you are 50 or older in 2016, you can now contribute an additional $6,000 as an annual “catch-up contribution.” That means for 50+ contributors, your cap is now $24,000 a year. If you’re one of the lucky ones who is close to paying off colleges or a mortgage, this is a time to redirect the money budgeted for those expenses into a retirement plan.
There are also favorable exceptions for IRA contributors. While younger savers may be eligible to contribute up to $5,500 per year to an IRA, those 50 and older can contribute an extra $1,000 to those accounts.
The IRS has details on catch-up amounts for other plans including a 403(b).
Is it Time to Re-evaluation Long-Term Care Insurance?
While more and more people are living active, healthy lives well into their 80s, many people 50+ will begin to experience health issues. Your 50th birthday is a great time to reconsider long-term health insurance. Long-term care insurance can help to prevent your retirement savings from being used to cover expenses from an unexpected long-term illness, instead of being used to finance the retirement lifestyle you have planned.
Is Your Life Insurance Up To Date?
As you enter your fifth decade, this is a great time to think hard about what would happen to your loved ones if you passed unexpectedly. Would your spouse be able to make it without your income? Would your children be able to finish college? Will others be able to cover your parent’s assisted living expenses? Make sure you have enough life insurance to cover your growing responsibilities.
Turning 50 is a big deal. You've graduated from youngster to established leader. Make sure your financial planning is up-to-date, and that you’ve covered all your bases.
And Happy Birthday GenX!
Mark A. Vergenes is President of MIRUS Financial Partners, 110 E. King St., Lancaster, 717-509-4521 or email@example.com Investment Advisor Representative offering securities and advisory services offered through Cetera Advisor Networks LLC., member FINRA/SIPC. Cetera is under separate ownership from any other named entity. MIRUS Financial Partners nor Cetera Advisor Networks LLC. give tax or legal advice.
Transamerica Center for Retirement Studies® is a division of Transamerica Institute®, a nonprofit, private foundation that is funded by contributions from Transamerica Life Insurance Company and its affiliates and may receive funds from unaffiliated third parties. For more information, please visit www.transamericacenter.org