For people in their 50s, financial planning has its unique risks and rewards. While you are at the peak of your income-earning power, you are also nearing your retirement age. You will likely take fewer risks with your assets and investments than when you were younger.
Think of your 50s as your last hurrah in building up and protecting your nest egg. This is where the following tips in financial planning can prove useful. Be sure to consult with an experienced financial planner about these matters especially when you have little to no idea about financial planning.
#1 Look into Social Security
Ask a financial planning professional and the South African Social Security Agency about social security benefits in your case. While the pensions from social security may seem low at present, the amounts can increase in the future depending on your contributions. In fact, your financial planning measures should include setting aside regular contributions to social security, which can be considered as investments for your future.
Furthermore, you should mind the gap between the income you will require for your retirement and the possible social security benefits you will be getting. You can then discuss your options with a financial planning professional in regards to the bridging the divide.
#2 Know Your Priorities
Even when you are at the peak of your earning power, you should still set your priorities. You will have competing priorities, such as your nest egg against your son’s college fund, your retirement fund against your travel fund, and your savings against your medical bills. Know and stick to your priorities so that you will have a retirement fund when the time comes.
For example, your son may demand dipping his hands into your retirement account for his college expenses. You should resist doing so because you and your son can find other means, such as grants, scholarships and part-time jobs, to finance his education. In contrast, you will likely be unable to find other means to finance your retirement when you are already 60 and broke.
Most important in financial planning, you should take stock of your assets and liabilities. You have to look at where you are now and where you want to be in terms of your assets. Be realistic about your goals in financial planning and get started on achieving them.