GREG ROBERTS’ ON THE MONEY: Reaching 50 is a signal event
One of the definitions of the word “signal” as defined in Merriam Webster’s online dictionary as “an act, event, or watchword that has been agreed on as the occasion of concerted action.” For many of us turning 50 is the time to re-assess the health of our bodies and the health of our retirement planning. According to Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, “If you start at 50, it’s possible everyone can get what they want, but if you start at 64, there’s less flexibility.”
First, if you are not healthy and reasonably fit, your golden years may not last as long as you had anticipated. My dear departed father did not see a physician for the last 30 years of his life; consequently, he had a major stroke and spent his final years in a nursing home. So, if you have not had a complete physical checkup recently, including a full blood screening, schedule one with you primary physician. Men older than 50 should have a PSA test. Yeah, yeah, sometimes false positive results may occur from a PSA test, but get one anyway. Everyone older than 50 should have a colonoscopy as often as your physician recommends, since this test is an effective way to prevent, or at least, minimize the effects of colon cancer.
Finally, if you can afford it, get a qualified personal trainer to access your flexibility, your mobility and your strength. Then, work out with him or her regularly. Remember that you cannot exercise your way to weight loss – 80 percent of your hoped-for weight loss will be the result of what you eat.
Here is an easy test to gauge your longevity. Sit on the floor and put on hand on your stomach and extend your other arm out from your side. Get up without using your hands, then switch hands. If you can get up both to the left and right, you should live a long life.
On the planning side, make certain you have a durable power of attorney in place, along with updating or preparing a will. Make plans now regarding how you intend to pay for long-term care expenses. Yes, it is now more expensive than ever and harder to get, but for healthy persons in their 50s, it may be a viable option. Then too, if you don’t have children, it may pay you to develop a social network of friends and acquaintances, in the event that you need custodial care at some point. Having such a network may allow you to get some care at home.
Age 50 is a good time to sit down with your spouse and imagine separately what a perfect retirement might look like. Then compare notes and come up with a plan for the two of you. One spouse may imagine a life living next door to the grandchildren, while the other may dream of a condo overlooking a golf course.
Even though you may have other pressing monetary pressures now, such as college expenses for your children or caring for an aging parent, don’t sweep retirement planning under the carpet, intending to clean it up later, since age 70 is only 20 years away. Why 70, you ask? That age will be the new normal retirement age by the time you get there, in my opinion.
Next, discuss with your spouse a budget for your retirement. In my financial planning practice, I am often asked: which is preferable-saving for retirement or paying off our house? For most persons, it is far more advantageous to save as much for retirement as possible. If you pay your house off, the only way that it can produce an income stream is via a reverse mortgage, and that option may not make sense for you.
Finally, discuss with your spouse and financial advisor the degree of investment risk you are willing to accept in building your retirement nest egg. Then, you should translate that risk tolerance into a concomitant allocation of your investments. If you have 10 or more years until you will need income, you can afford to accept more risk than you should if you have only 5 or less years remaining. 10 years will provide you some time to recover any losses that you may experience in down markets. Remember, it is never too soon to start saving for your dream retirement.
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Greg Roberts is a certified financial planner with 35 years of financial and estate planning experience.