Firm up retirement options. This is the decade to think realistically about your retirement. “Decide what kind of lifestyle you want and plan accordingly,” says Dunagan. For example, if you will be dividing your time between two homes, you need to earmark savings for travel expenses.
Continue saving for retirement. With people living longer, everyone must continue to invest for their retirement. Dunagan says Williams should increase her current savings of $300 a month to at least $500 a month, with $200 going into a Roth IRA that invests in an S&P 500 Index fund.
Calculate the right portfolio risk. Don’t be too conservative, “because you could still have a lot of life to live and inflation would eat away at your principal,” says Dunagan. But don’t be overly aggressive because a lot of people had to go back to work because of their losses in the stock market. Staying on top of your portfolio at this time of your life is not a luxury but a necessity. “You must be diligent about visiting your financial planner once or twice a year. You really have to track your assets the closer you get to retirement,” says Dunagan.
Build an emergency fund. Dunagan recommends that Williams accumulate a minimum of $6,000 in emergency savings, or three months of living expenses.
Consider investments outside of the market. This will give your portfolio diversity. Over the next three to five years Williams wants to buy a two-unit apartment building with her sister in Florida that can earn rental income.
Take care of aging parents. Deal with end-of-life issues, like where your parents want to live and how. Do they have a will? Are they covered for long-term illnesses? Find out how you fit into their future and what may be required of you emotionally and financially. Advance knowledge will help you prepar
e on both fronts.
Downsize housing costs. Consider selling your home for a smaller one or a condo. You can invest the proceeds toward retirement. A house can be a tremendous financial and physical responsibility. Williams still has more than 20 years to pay on the condo she purchased in the late 90s. Dunagan says she should add at least $100 a month more to the principal while she’s working so she can cut her mortgage to essentially a 15-year mortgage. That way, by the time she retires, she’ll have five years or less to worry about payments.
Stop giving to relatives/children. “Find a way to wean them off you, because you may reach a point where you can no longer afford to lend a helping hand,” says Dunagan.
Explore long-term care insurance. If it makes sense, purchasing it in your 50s is a lot cheaper than at 70.
Adjust life insurance. If husband and wife are both working, make sure each has adequate life insurance for what they would be responsible for during those earning years, says Dunagan.
Overall, Dunagan feels good about Williams’ retirement. Between her job and pension she nets about $3,500 a month. With expenses typically just