Retirement: Nifty Or Shifty At 50?

They say 50 is the new 20. I don't know who "they" is, but there is some logic to that. If you had kids, there's a chance they're out of the house now and you are free and clear to once again enjoy an independent life. You may have some disposable income and can travel, attend concerts, and loosen the coin purse knowing you're secure in your finances. Let's call this the Nifty 50: you're well on track to your retirement, stable in your career, and in overall good financial shape. But there's the other end of the spectrum. What if you're buried in debt, unemployed, and/or have little to nothing for retirement? Let's call this Shifty 50: needing to shift priorities to salvage a decent retirement. Yeah, I'm forcing that to keep the rhyme in place - sue me! By your sixth decade, the course is fairly set for your retirement, so let's talk through those two basic paths.

Her retirement savings are outstanding, but she can't afford furniture.

Thrifty To Get Nifty?

Let's start with the ideal path - you're on your way! You've saved plenty for retirement and are well on your way to your retirement goals. It's not just how much you've saved, it's also how much you need and when can you retire. The best retirement planners can't determine your exact retirement at age 25 - how much you need to put away monthly to get the exact dollar amount to retire the way you want. The world changes - stock market returns vary, inflation costs, housing prices, medical care, etc. will all be different over the years of your working life. How much you save vs. how much you need to retire is going to have to be adapted as you get closer to putting in your two weeks. Checking in on your retirement savings vs. goals is critical in your 50's. Adjusting accordingly along the way will ensure you get closer to what you want. Can you retire a year earlier? Do you have to scale back that 6-month European vacation? Another consideration here is asset allocation. How risky should your portfolio be? Generally speaking, your risk tolerance should go down as your near retirement, so consider shifting some of your riskier investments to more stable instruments. If your eyes glazed over reading that last sentence, find a financial planner to help you accomplish this. Dialing in your retirement as you get closer will give you the peace of mind to make the best decision.

Perhaps you could retire in your 50's. If you can pull it off, congratulations! That's an amazing accomplishment and hopefully you can enjoy your golden years comfortably. For those of you in this club, I'm going to cover how you pull that ripcord in my next blog on retirement in your 60's. What if you're cruising along, and you have an unexpected major life expense? Your daughter and her five children move back in, you lose your job, or have a life-changing medical diagnosis? While you can prepare all you can, life happens. These types of situations are why I keep preaching to build your retirement savings aggressively when you can, so you're more insulated from setbacks. Again, be prepared to adapt by adjusting retirement goals.

Shifty In A Jiffy

So if the last section doesn't speak to your circumstance, here's the dose of reality. Hopefully, you realized earlier in life that you may not be able to retire the way you wanted... or never really thought about it until now. Bluntly: you're not getting the dream retirement. Short of a huge settlement from a fluke injury thanks to your local ambulance chaser, you will have a modest final chapter. And that's okay! Nothing says you can't be happy in retirement if you're not wealthy. You can still spend your time doing as you wish - hobbies, grandchildren, serving on your HOA board, or whatever brings you joy without a big price tag.

If you find yourself relating, is all hope lost for a nice retirement? Not necessarily. You can still try to recover; contributing more to your retirement is never a bad idea. What's changed between your 40's and 50's is the time value of money. Where you could have 20+ years to recover at 40, you've lost another decade for your retirement savings to grow. Additionally, your contributions later in life are more risky - what if the market crashes? While the stock market is still a great tool for building retirement savings, it's a long-term proposition. Timing the market is not much different from putting all your money on red at the roulette wheel or taking the over on the Sunday Night Football game. If you've waited until 59 to invest, and decided to put all you're money into the latest cryptocurrency you heard a Gen Z co-worker talk about, I can't do anything for you. If you have some extra money you can put into something real - you know, like a company - and can spread the risk across several assets classes, now we have a shot at some progress towards a better retirement.

Is your retirement fate set at 50? Not at all - things can change. You could be well on your way, and hit a bump in the road. Or, you could have some good fortune and be able to salvage your savings. However, the course is mostly set due to the time value of money. As you get closer to the end of your working life, keep a close eye on your progress and react accordingly. You're getting close! If you are exceeding retirement goals and want to enjoy the last few years of your career by traveling more, going to nice dinners, or finally buying that Muggsy Bogues autographed jersey, go for it! We are approaching the end of this series - your 60's and retirement. Until then, throw a few dollars into your retirement accounts for me.