5 goals every baby boomer should set
Even if you're in your 50s, it's not too late to get started.
A reader recently asked about financial goals for those 50 years old or better. Here’s her question:
Now I'd like to know if you can list ways of setting up long-term goals for people 50 years and over. At least some examples would do the trick.
While I’m not quite 50, I’m much closer than I care to admit. And so the reader’s question was timely for me. And it got me thinking about whether financial goals should be different based on your age. The answer it seems to me is unequivocally yes. It’s not that any particular age is significant, but your stage in life likely will affect your goals and desires. And why shouldn’t financial goals be part of this?
So I sat down and thought through what financial goals many baby boomers should have or at least strongly consider. What came from that exercise is the following list of five financial goals.
Get out of debt. While ridding yourself of debt is an important goal at any age, it’s particularly important as you transition from your working years to retirement. When you are just starting out, you have years of earned income ahead of you to pay a mortgage and perhaps other debt. But once you retire, most are living on a fixed income. At 50, it's a perfect time to redouble your efforts to get out of debt. For further reading, here are some tips on how to eliminate debt.
To me, getting out of debt is the single most important financial goal for those 50 or older. Being debt-free gives you freedom of choice you just won't have if you are struggling to pay the mortgage or other loans.
Maximize retirement savings. It's never too late to save and invest money. For those who didn't start saving for retirement early, it's easy to think that saving in your 50s is pointless. It's not. At age 50, most still have 15 years or more to work and save. Depending on how much you put away and how you invest it, a lot of money can be saved over 15 years. And it's easy to do. Here is some additional reading to get you started:
- Dave Ramsey's Step No. 4: A visual guide to saving 15% for retirement
- Are you saving enough for retirement? Check out this rule of thumb
- 11 online retirement calculators
- The Ultimate Guide to Traditional and Roth 401ks and IRAs
Plan for big expenses. At 50, there are likely some big expenses yet to come. Depending on the age of your children, you may have college and wedding expenses. You may be planning a trip around the world. Regardless of the expense, it's important to identify them as early as possible and begin saving. It's easy to open a high-yield savings account and automatically save a certain amount each paycheck.
Seek career freedom. This is one of my big goals -- to find a job that allows me to work anytime, anywhere. I like my current job, but it requires me to be in my office five days a week. When my children graduate from high school in a couple of years, I want the freedom to be able to live in a warm climate during the winter and a cool climate during the summer. I'd like to be able to work from home, if not every day, at least most days.
And with career freedom, I'll enjoy what I do more and likely work longer (which helps with retirement). I've written about this idea before -- “Slow-motion retirement: A new way to look at the rest of your life.” So I'm planning now financially to be able to take on work that gives me this freedom. This basically means I'm tackling my debt (see Goal No. 1 above). With little or no debt, I'll have the freedom to either work for myself or take some job that gives me the freedom I'm looking for.
Think about where you will retire. Where are you going to live in retirement? If you move to Florida, you pay no state income tax. I'm not suggesting all retirees move to Florida, but at 50 you should begin to think about where you'll retire, and what the financial consequences are of your decision. Where your family lives will likely be a significant factor in your decision, but so should finances. The key is to start planning early.
Dream dreams. This is a bonus goal. I am constantly asking myself what I want to do when I grow up (it drives my wife crazy). Don't ever stop asking that question. In your part of the world, in your own way, make a difference in the lives of others. This isn't a dress rehearsal; we get one shot at life. Make yours count.
Related reading at The Dough Roller:
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