Let’s face it: you have a lot going on in your 50s—hitting your stride at work, sending your kids out into the world, and navigating the complexity of your parents’ aging.
It’s a lot.
But in the midst of all that, your 50s are a vibrant decade for building wealth that will help sustain your lifestyle in retirement. At Bienvenue Wealth, our firm specializes in one thing: helping Gen X investors like you leverage assets today to support your lifestyle tomorrow.
With that in mind, here are five ways to build wealth more intentionally in your 50s.
1. Play Catch-Up
You’ve been diligently saving for retirement throughout your career, but you have a unique opportunity to save more as soon as you turn 50.
How, you ask?
In your 50s, you can start making valuable catch-up contributions to your retirement accounts! These are over and above the traditional income limits. The 2022 numbers are as follows:
- 401k, $6500,
- IRA $1,000,
- HSA $1,000.
By maxing out your accounts with this new level for at least a decade, you’re setting yourself up to meet your goals.
It’s like the burst of energy you feel after a long run, but the finish line is in sight. Don’t let up on that metaphorical gas pedal!
Your future self will thank you for your dedication and sacrifice now when you have met your goals later.
A bonus tip: don’t touch your retirement accounts early. While it may be tempting to take a loan from your 401(k) when you’re in a bind, let these accounts keep compounding your nest egg. Doing so also means you won’t have to worry about extra taxes or early withdrawal penalties.
2. Investigate Additional Compensation Options
They don’t call your 50s your peak earning years for nothing. You’re making more money, and likely have different sources of income at your disposal.
Many companies offer senior-level employees equity compensation. Equity can be a significant part of your total compensation package and is an excellent way to build wealth strategically.
- Ensure you understand the type of equity you have: ISOs/NSOs, RSUs, ESPPs, etc.
- How and when your stock options will be taxed
- What restrictions you need to meet to receive promised future shares of stock in your company (performance, time, etc.).
You may also have access to other executive options like deferred compensation routes. No matter what, be sure to maximize your compensation package.
But maybe you aren’t looking to stay where you are. Perhaps you are ready for a career change.
With all the experience you’ve built, you also have more career options. You might want to change jobs to a place that will pay you more for your expertise. Or perhaps you want to strike out on your own and start a business.
Consider this your second act. Martha Stewart was nearly 50 before signing a deal for her wildly popular lifestyle magazine. Vera Wang was 39 before designing clothes and becoming a global wedding dress icon. Both women had other careers before they ventured out to try their hands at their dreams.
Maybe your dream isn’t to start your own business but to work at a company that shares your values. Understand how different opportunities will fit into your life and your money.
3. The Nest is Starting To Empty
Though it may seem unlikely, someday, sooner than you think, there will be no more children living at home. As they venture out into the world, they will hopefully be prepared to look after their own financial needs. This means the bank of mom and dad might find the coffers fuller than they used to.
What do you do now with your extra money and time?
With the nest empty, it’s a great time to treat your cash flow a little differently. What will you do with the extra cash? Here are some options to consider:
- Pay off lingering debt. Interest rates are rising, which makes debt even less attractive. If you have debt with variable interest rates like a home equity line of credit, HELOC, adjustable mortgage, or a personal loan, redirect funds there.
- Max out your retirement savings. Now that you have catch-up contributions, there’s a new “maximum,” so redirect extra cash flow there. Consider maxing your workplace plan, IRA, HSA, etc.
- Invest outside of retirement. Fill up a brokerage account, pad your cash savings like an emergency fund, etc.
- Create a plan to help your aging parents. So many people in their 50s struggle with helping their parents financially and personally. Maybe you can afford a part-time caregiver or additional support. In endeavoring to take on new opportunities, ensure you’re still on track for retirement.
Sure, empty nesters tend to have some extra room in their cash flow, but they also have more time, notably time with their spouses. This additional time can be a significant transition for many couples.
Be intentional about spending quality time together in this new phase of life. Cook meals together, take long walks, and if the budget allows, maybe a weekend away to a cozy bed and breakfast—or whatever you love doing together!
Your time is just as valuable as your money. Make sure you use both to your advantage!
4. Get Motivated To Pay Off Debt
The Gen X generation bears more debt in nearly every category—credit card, home loan, auto loan, student loan, you name it—than any other generation.
However, that debt doesn’t have to stick with you into retirement.
How do you accomplish a debt-free retirement?
Explore all of your options and build a plan you can stick with consistently. Be mindful of your existing debt and the debt you take on in your 50s. Sure the unexpected can occur, but do not take on more than you can!
Maybe now isn’t the time to cover your adult children’s expenses or take on all the bills for your parent’s long-term care. Set boundaries, keep your financial future in mind, and ask for help when needed.
It is important to take actionable steps to create a plan to strategically pay off debt while still saving for retirement.
You certainly want to be there to help others, but you also must think of your financial well-being. It’s essential to prioritize your future. If you do, maybe you will have some wiggle room to help others in the future.
Check out our handy resource guide for some important questions to ask yourself as you work through your debt and continue to save for your future.
5. Retirement Is On The Horizon, And You Want To Be Ready
Someday, you will have your last day at work, and there will be a happy retirement cake with your name on it. That means it is time to start making more realistic retirement plans financially and personally. Not sure where to start?
Start by setting SMART goals.
The acronym SMART stands for:
- Specific
- Measurable
- Attainable
- Relevant
- Time-bound
This strategy provides a concrete path to helping you uncover and achieve your goals. You must think about your goals and the steps you need to take to get there.
Need help setting goals and making the most of your wealth-building opportunities in your 50s?
We’re here to help!
If you are looking for comprehensive services to help you build your wealth, give us a call today.
We look forward to helping you make the most of this exciting decade.