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Six Retirement Planning Tips for Those Over Age 50

Investors aged 50 and older have many opportunities to enhance their financial preparation for retirement.

Entering your 50s and behind in your retirement planning goals? Don't fret. You've still got time to get your financial plan back on track.

There are many steps that older investors can take to better prepare themselves financially for retirement. Here are six tips that may help you make the most of your final working years.

  1. Catch up. If you have access to a 401(k) or other workplace-sponsored plan at work, make the $5,500 catch-up contribution that is available to participants aged 50 and older. Note that you are first required to contribute the annual employee maximum, $17,500 for 2013, before making the catch-up contribution.
  2. Fund an IRA. Investors aged 50 and older can contribute $6,500 annually (the $5,500 annual contribution plus an additional catch-up contribution of $1,000). An investor in his or her 50s who contributes the maximum amounts to both a 401(k) and an IRA could accelerate retirement savings by more than $25,000 a year.
  3. Consider dividends. If you do not have access to a workplace-sponsored retirement plan, or you already contribute the maximum to your qualified retirement accounts, consider stocks that offer dividend reinvestment.1 Reinvesting your dividends can help to grow your account balance over time.
  4. Make little cuts. Consider how you can trim expenses while continuing to enjoy life. Some suggestions for quick savings: eliminate or reduce premium cable channels that you do not watch, memberships that you do not use regularly, and frequent splurges on dining out or coffee runs. An extra $100 a month saved today could make a big difference down the road.
  5. Review strategies for postponing retirement. You may be able to learn new skills that could increase your marketability to potential employers. Even a part-time job could reduce your need to deplete retirement assets.
  6. Don't give up. Many preretirees falsely believe that there is nothing they can do to build retirement assets and, as a result, do nothing. Remember that you control how much you invest and, in many areas, how much you spend. Make a plan -- and stick with it.

1Investing in stocks involves risk, including loss of principal.

 

Michelle Maccio is a CERTIFIED FINANCIAL PLANNER™ and is the founder of  Maccio Financial Group. For more information, visit the company website at www.macciofg.com, or call (860) 426-1407.

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Charles February 25, 2013 at 07:28 PM
very funny comment. My first boss when I was 22 out of college told me to save 10% of my salary every paycheck. Started then and now I am 52 and I have nearly $675,000 in my retirement account.
Richard Poulton February 25, 2013 at 08:15 PM
Revman, when we stop seeing parents buying their kids sneakers costing $150.00 the maybe the "kids' will start learning that mommy & daddy do not have a money tree. Remember that phrase? There is a very simple 2 letter word that my parents used all the time - that was NO. Then they should tell them if you want it go earn and save your own money. Hopefully that line of thinking will be continued into adult-hood. Though I doubt it. Charles' comment above says it all as well. Way to go Charles, just hope its in a nice low tax plan?
Richard Poulton February 26, 2013 at 04:11 PM
FYI to those that play in the stock market a little, those that do your own buying & selling on line. If this sequester takes place in a few days the market just may react to the negative, driving down the shares of some companies, puttng them in a better price range to buy at a low. The market will correct itself and start returning to the up-side. Just saying.
REVMAN March 02, 2013 at 03:52 PM
I would be leary of stocks that haven't in existance for at least 10 years.2 stocks don't make a portfolio because you would need thousands of shares to make good money.
Jim G. March 02, 2013 at 05:51 PM
@REVMAN, if you only hold stocks that have made their initial run and found a stable point, you're unlikely to ever see much return from them.

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