When it comes to funding your retirement and investing there are different needs and different tasks that should be accomplished depending on where you are in your adult life. If you’re between 40 and 50 years old then you’re in luck because this wealth building tips blog was made just for you. What we’ve done is put together a smattering of advice, information and the usual great stuff, all of it pertaining to what you should do as far as retirement funds and investing just before you hit the half-century mark. Enjoy.
One of the most important things to note is that, between the age of 40 and 50 years old, you will probably be at your peak earning level. It’s for this reason that you need to really ramp up your savings and sock as much money into your IRAs as possible. Yes, you’re making more money than you’ve ever made and there will be the temptation to spend it and ramp up your lifestyle but, unless you are also able to invest enough to keep that lifestyle going, you’re going to be in trouble once you stop working.
Based on research done at Columbia University and the University of Chicago, it was found that the best way to motivate yourself to save for retirement is to take some time and envision what your life will be like in 20 to 30 years. Researchers found that, when a person feels a stronger connection to their future self, in many cases they will be more willing to put off and wait for a reward, which in this case would be retirement with no financial worries.
If you’re keen on taking a look at yourself in the future you can surf to www.faceretirement.com and have a picture created of what you will look like. It’s fun but a little scary.
Continuing on this topic, it is been found that nearly half of all successful retirement savers (and by successful we mean that they were able to build a retirement fund equal to 10 times their pay) saved at least 15% of their total income over a ten-year period. Also, it has been shown that people who use yearly bonuses to fund their retirement, what they call ‘burst savers’, were very successful because they put raises, bonuses and banner commissions into savings rather than spending them on bigger homes, cars and bills.
50 is a big number as far as birthdays go but also as far as your retirement plans because, once you reach the big 5 0, you can start making catch-up contributions to the tune of $5500 in your 401(k) and $1000 in your IRA. Another federal rule that will help you if you earn more than $113,700 is that this number is the maximum income subject to Social Security taxes. Successful savers are the ones that take the resultant extra money in their paycheck and stuff it into their retirement funds.
During these years is when many people who are also parents face another huge expense; college costs. Indeed, many moms and dads raid their 401(k) to cover college costs but it’s possibly one of the worst things that you can do with your money. Not only that but, with college costs skyrocketing, one of the smartest things that you can do is make sure that your child graduates in four years or less. Experts will also advise that if you have to resort to PLUS loans you probably can’t afford the college to begin with and also that you should not borrow any more than you can definitely repay within 10 years or by the time you retire, whichever of the 2 comes first.
We hope you’ll agree that we’ve put together some interesting, important and valuable information here for you. That does it for Part 1. When you get a moment make a note somewhere to come back and visit us for Part 2 very soon. See you then.