A long credit history, ideally several decades worth of investing and a great financial future ahead, your 50s and 60s should be smooth sailing. There are some common financial mistakes made by people in this age bracket, though. From retiring too early to holding on to a big, empty home, these financial pitfalls could damage your long-term plans.
Starting Social Security Too Early
If you begin drawing on your Social Security benefits when you are eligible at age 62, you’ll miss out on your full benefit. Your full benefits won’t be available until you turn 66, so starting at age 62 can cut the amount you receive by about 25%. Avoid the temptation and continue to bank for retirement after your 62nd birthday to be sure you have the amount of money you need.
Not Evaluating Housing
Does your home still truly fit your lifestyle, and will it still work once you retire? Failing to re-evaluate your housing needs is a costly error; you may be able to upgrade your home or neighborhood by moving to a smaller, but better quality home with plenty of amenities.
If you are faced with a suddenly empty nest when the kids head off to college or to their adult lives, it is time to reevaluate your housing. Holding on to an oversized home can cost you; you’ll still be paying to run and maintain your home, even though the kids have moved out. Make sure that the home still suits both your lifestyle and financial future; a two-story home may not be great for you in retirement if you have known mobility issues.
Being Too Conservative With Investing
While conventional rules of thumb require you to invest more conservatively as you age, being too conservative can harm you as well. Make sure that you are truly earning as much of a return as you can by continuing to diversify your investments and including variable risk levels. Having some higher risk investments as part of your portfolio can help you yield a bigger nest egg for retirement.
Taking On Too Much Debt
You’ve established a long credit history, have a growing net worth and an outstanding FICO score, and so don’t be surprised when banks and lenders begin to court you. Taking advantage of too many offers or using too much debt could backfire later Evaluate any debt you acquire and make sure it is truly worth it; this is also a prime time to pay off any existing or lingering debt from your younger years, too.
Slacking Off On Retirement Savings
You’ve saved a bundle, so now it’s time to take a break, right? If you stop saving now, you’re missing out on some of the most powerful years for investing you’ll have. Keep investing in your retirement until the big day arrives to ensure that you have all of the funds you need.
Failing To Prepare For Emergencies
From disability insurance to life insurance, having a backup plan in place can protect your assets. Failing to prepare fully for surprises can rapidly chip away at the money you’ve saved. This is also the time to protect your spouse and family by planning out your estate and writing your will.