Your 50s are a time of transition. Many workers reached their peak in the 50s and found their ideal career niche. If you have a family, your 50s is also the time when children leave or leave the nest. That adds up to much more disposable income, and if you're like many people and have put off saving for retirement, it's a smart time to catch up.
At the same time, many workers are starting to itch Look more closely at early retirement when they reached their 50s. Whether it's the daily grind or the fear of fulfilling all your dreams, the prospect of hitting a clock until age 65 or later may sound unbearable.
No matter which way you lean, it's smart to plan something in your 50s to prepare for your retirement. Here are three things that you should certainly do.
Use your catch-up money
The Federal Government knows only too well that many people do not have the means or the motivation to think about retirement later in their job. This is an important reason why there are several provisions in the tax laws that allow retirees to retire. These include:
If you're lucky enough to save more money to save in the '50s, using these provisions will help you start your retirement faster and put you in a better position when you retire 2. Social security preparation
For most workers, social security is a major source of retirement income. So, whether you want to work longer or retire is important to know how Social Security affects you.
If you plan to retire early, you must understand that Social Security is not there for quite a while. Advance benefits for workers will become available only at the age of 62 and you will have to wait four to five years longer to receive full pension entitlements. As you will see in more detail below, it is important for you to find alternative sources of income in the 1950s and early 1960s.
However, if you plan to continue working indefinitely, maximizing your earnings is the best way to give your benefits a boost. To calculate your monthly payment, Social Security Administration looks at the 35 best years of your career and calculates the average monthly earnings after indexing your income history to take inflation into account. The more you earn now, the more you raise that average, and that can make a big difference to what you get from social security in your golden years.
. 3 Gain Access to Your Savings on Early Retirement
If you decide to retire early in the 50s, it's helpful to know when you can use your retirement plan. If you have regularly used taxable accounts to invest your savings, you have access at all times regardless of age. But if you've saved a lot of money in 401 (k) s, IRAs, and other tax-privileged retirement accounts, then you need to know the rules a little better.
For traditional IRAs, the general rule applies to withdrawals before reaching the age of 59 1/2 years are subject to a penalty of 10%. There are exceptions to the rule for a number of things, including money for expenses related to higher education, large medical bills, or up to $ 10,000 for the first purchase of a home. But if you do not want to go the relatively complicated way of setting up a series of essentially equal periodic payments, waiting, if possible, can be the best option.
For 401 (k) plans, the rules are slightly different. If you leave your job at the age of 55 or later, you can start charging for penalties immediately. However, this rule applies only to the 401 (k) you had with the employer you worked with when you turned 55 and then left. If you finish before 55, the special rule does not apply, and you must wait until the age of 59 1/2, as you would with an IRA or other retirement account.
She can retire
It may be hard to imagine retirement in the '50s just around the corner. But keeping these ideas in mind puts you in the best possible position to retire with the financial security you want.