Turning 58 is not just another birthday; This is a strategic checkpoint on your retirement journey. As an investment professional and certified financial planner, I find that now is a critical age when people begin to evaluate the possibility of leaving the workforce or making decisions that more consider their personal values, goals, and desires.
With the focus on how to enjoy retirement coupled with serious thoughts about legacy, one’s thoughts always turn to financial status. Here are four steps you can take to make the most of this critical time.
See also seven important retirement decisions to make by age.
At 58, you’re close to retirement and can make accurate predictions and stress-test your portfolio. Now is the time to update your financial projections and revisit your retirement goals, expected expenses, and income sources.
You need to consider longevity risk, since retirement could last 30 years or more. Focus on health care plans and estimate your health care costs. Remember, you’re too young for Medicare, so plan to buy private insurance or COBRA if you retire early. Also consider supplemental policies for dental, vision and hearing.
Finally, stress test your portfolio. Evaluate how your investments perform under different market scenarios and adjust your asset allocation to balance growth and protection.
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Your 50s are typically your peak earning years, and the IRS allows for catch-up contributions to retirement accounts. Take advantage of catch-up provisions in 401(k)s and IRAs.
Also revisit employer matching. Make sure you take advantage of every financial benefit.
Finally, review how to use a health savings account. They offer triple tax benefits, and the resources can be used to pay for qualified medical expenses in retirement.
Planning for retirement at age 58 can be complicated. Spend time working with a financial planner. They can help you understand Social Security claims strategies, health care planning and portfolio management.
An important part of the change is determining insurance needs. Ask an insurance expert about long-term care, supplemental health insurance and life insurance. Many people realize too late that their long-term care needs have significantly increased.
Please also seek legal and tax advice. Peak earning years give a person the opportunity to increase their overall net worth. Attorneys and tax advisors can assist in updating any estate plans and optimizing tax strategies.
