FINANCIAL FITNESS CHECK-UP AT FIFTY

What do J.R.R. Tolkien, Jack Cover and Ronald Reagan have in common? You may not know this, but they all had amazing accomplishments after their 50th birthday.

J.R.R. Tolkien published the first installment in the Lord of the Rings fantasy series at age 62. Jack Cover’s name may be unfamiliar, but the man started Taser, Inc. when he was 50 years old to find a weapon that could stop assailants without killing them. And Ronald Reagan, a famous actor earlier in life, was first elected to public office when he was 55 years old.

Whether or not you are gearing up for your book, a marathon or a sail around the world, turning 50 is a beautiful thing. In fact, you might feel much younger! However, chances are your financial planner remembers your age very well because money decisions at 50 can shape the rest of your long life.

Are you ready for a financial fitness check-up? Read on for ideas you can do on your own or bring with you to your next financial planning appointment.

Reassess your healthcare coverage.

Getting older can mean more medical appointments. More medications, eye care, dental care and lab tests may also be in your future. While a “bare bones” insurance plan might work just fine for a healthy 25-year-old, someone in their 50’s should take an honest look at family and personal medical history to choose a coverage plan that actually covers them. This may mean a combination of an insurance policy, prescription coverage, and a savings account for those unexpected surprises.

Consider long-term care.

You are in good health and active. Your kids may not even be married yet! It is difficult to imagine that there might be a time it will take effort to feed or dress yourself. And yet, surveys show that many in the 50+ crowd will need some kind of extended care assistance relating to illness, accident or simply getting older.

Long-term care policies are complex. They can also be expensive. However, the older you get, the more costly your premiums will be. If long-term care is on your radar (and it should be!) begin by having honest conversations with your family. Who will take care of you if you get sick? Do you plan to self-fund hired help through a dedicated savings account, or would you prefer to have an insurance policy? There is no single “right answer” for everyone, but it is far better to begin asking these questions sooner rather than wait for an emergency.

Check your 401k contributions.

Life is full. Between working, community involvement, kids and hobbies, many of us put the 401k on autopilot. It is easy to “set it and forget it,” and the automated nature of the payroll withholding can help you save. However, be sure that you periodically review and update your investments and your contribution amounts. If your contribution is the same today as it was 10 years ago, time to bump it up!

Remember also that you can make extra catch-up contributions to your 401k (or similar) plan the year you turn 50. That can mean an additional $6,500 a year in savings!

Look through your estate planning documents.

If your response here is “What estate planning documents?” then you have work to do. Adults of any age should have a valid Will and Powers of Attorney documents. Age 50 is a good check-point to be sure those documents are still accurate. If you went through a divorce or had another change in your personal circumstances, you should meet with an attorney to revise those documents.

Be careful with debt.

After you retire, interest payments can cut into your income stream – and you won’t have the luxury of just working harder to make ends meet. Therefore, age 50 is the time to get aggressive about paying down existing debt (and being cautious about taking on more). Balancing debt repayment with investing can be a tough act, which brings me to the next point.

If you are not working with a trusted financial planner yet, now is the time!

Do you need long-term care coverage? Should you pay off your mortgage or put more money into a tax-deferred savings account? Is now the time to drop (or buy) life insurance?

Those are the difficult questions you cannot simply Google. Your personal goals, family circumstances, assets and debts, lifestyle and cash flow will define your individual best course of action. And the only way to be sure you are making good decisions is to work with a trusted financial planner. Just like a medical check-up, this is a necessity that will save you time, money and headache.