If you read Part 1 of this series, you’ve already started building a solid foundation for retirement. You know it’s time to start thinking about retirement income instead of just retirement savings. You’re paying attention to what your lifestyle actually costs. You’re taking advantage of opportunities to save more, and you’re making sure your investments still fit the life you’re preparing for. We know you immediately went to work on these things 🙂
Now let’s talk about the stuff that causes a lot of people to throw up their hands and say, “I’ll deal with that later.”
Taxes.
Social Security.
Estate planning.
Long-term care.
None of those topics are particularly exciting. They’re the kinds of things most people try to avoid for as long as they can.
The problem is, “later” has a funny way of turning into “I wish I would have thought about this sooner.”
You don’t have to become an expert on any of these topics. You just need a plan.
Your 50s are the perfect time to start asking good questions while you still have options. Because good retirement planning isn’t about predicting the future, but putting yourself in a position where you have choices.
Let’s tackle four more items that deserve a place on every financial checklist for your 50s.
1. Start Thinking About Taxes Before They Become a Problem
For most of your working life, taxes have probably been pretty automatic. Your employer withheld them from your paycheck. You contributed to your 401(k), which lowered your taxable income. Every spring, you gathered your tax documents, crossed your fingers, and hoped for a refund.
There wasn’t much to think about.
Retirement changes that.
Once the paychecks stop, taxes become a lot more hands-on.
Now you get to decide where your income comes from. Do you withdraw from your IRA? Your Roth IRA? A brokerage account? Should you realize capital gains this year or wait until next year? How much income do you actually need?
Those decisions impact how much you pay in taxes over the course of your retirement. That’s why your 50s are such a great time to start thinking ahead.
Notice we didn’t say “start doing Roth conversions.”
Could Roth conversions make sense? Absolutely.
Could they be the wrong move? Absolutely.
It depends on your income today, the tax bracket you’re in, when you plan to retire, and what you expect your future tax situation to look like.
Please don’t jump into a strategy because you read about it online. Make sure you understand your options before you need them.
The same goes for Qualified Charitable Distributions (QCDs). They can be an incredibly powerful planning tool for retirees that give to charity. They’re not available until later in life, but your 50s are still the perfect time to understand how they might eventually fit into your retirement plan.
One of the retirement tax rules that often catches people by surprise is the Required Minimum Distribution (RMD).
An RMD is exactly what it sounds like. Once you reach a certain age, the IRS requires you to begin taking minimum withdrawals from most pre-tax retirement accounts, such as Traditional IRAs and many 401(k)s. Those withdrawals are generally taxable, whether you need the money or not.
It isn’t that uncommon for us to meet a 74 year old who says: “I had no idea Required Minimum Distributions were going to be this large.”
By that point, there aren’t nearly as many planning opportunities left.
The best tax strategies are usually developed years before they’re needed.
That’s why we encourage people to start learning about retirement taxes while they’re still working. You don’t have to become a tax expert, but you do want to understand how the rules begin to change.
Because retirement isn’t just about how much money you’ve saved. It’s also about how much of that money you actually get to keep!
2. Have a Plan for Social Security
If there’s one topic that’s guaranteed to get people talking, it’s Social Security.
Everyone seems to know someone who claimed early, someone who waited until age 70, and someone who’s absolutely convinced they know the “best” strategy.
Years ago the rules around social security were quite a bit than they are today. There used to be a lot of complex claiming strategies available to us.
Today, for most people, the decision comes down to a fairly straightforward question: At what age should I start my benefits?
Simple doesn’t mean unimportant.
For many retirees, Social Security will provide a significant portion of their retirement income. And because your benefit can be permanently reduced or increased depending on when you claim, it’s a decision that’s worth thinking through carefully.
The “right” age isn’t the same for everyone.
It depends on things like:
- When you plan to retire
- Your health and family history
- Whether you’re married (or were married in the past)
- How much you’ve saved for retirement
- Whether you plan to keep working
- Your overall retirement income strategy
One thing we see fairly often is someone who says, “I’m taking it at 62,” or “I’m waiting until 70,” without really considering how that decision fits into the rest of their retirement plan.
But Social Security doesn’t exist in a vacuum.
It affects how much you’ll withdraw from your investments. It can impact your tax picture. It may impact a surviving spouse’s benefits. And it plays an important role in determining how long your retirement savings may need to last.
That’s why the question isn’t simply:
“When can I start Social Security?”
It’s:
“When does it make the most sense as part of my overall retirement plan?”
There isn’t a one-size-fits-all answer so it’s worth strategizing before you file.
3. Dust Off Your Estate Plan (Or Finally Get One)
Let’s be honest. There are only a few people who enjoy estate planning… and it’s usually people who make a living doing it.
Nobody wakes up on a Saturday morning and thinks, “You know what sounds fun today? Let’s update our powers of attorney.”
But your 50s are actually one of the best times to take another look. Not because you’re getting old (50 is the new 30 right?). Because your life probably looks completely different than it did 10 or 20 years ago.
Maybe your children are adults now. Maybe there are grandchildren in the picture. Maybe you’ve accumulated significantly more wealth than you had when you first signed those documents. Maybe you’ve bought a vacation home, started a business, inherited property, or moved to another state.
Or maybe (like a lot of people) you’ve never actually gotten around to creating an estate plan in the first place.
Life gets busy and estate planning often ends up in the “I’ll do it someday” pile.
Until someday turns into an emergency.
The good news is that estate planning isn’t just about deciding who gets what when you’re gone. It’s about making life easier for the people you love if something unexpected happens.
A good estate plan typically includes documents like:
- A will
- A living trust (for some families)
- Financial powers of attorney
- Healthcare powers of attorney
- Advance healthcare directives
- Updated beneficiary designations
Those documents answer important questions like:
- Who can make financial decisions if you can’t?
- Who can make medical decisions on your behalf?
- Does your family know what your wishes are?
- Will your assets pass to the people you intend?
One thing surprises a LOT of people: beneficiary designations often override what’s written in your will. Wait, what? Yes, it’s true.
That’s why reviewing your retirement accounts, life insurance policies, and other beneficiary designations is just as important as reviewing your estate documents themselves.
You don’t have to become an estate planning expert. That’s what good estate planning attorneys are for. But your 50s are a great time to make sure your documents still reflect your life today and not just the life you were living twenty years ago.
Your family will probably never thank you for having perfect paperwork. But if they ever need it, they’ll be incredibly grateful that you took the time to put it in place.
4. Learn About Your Long-Term Care Options
Long-Term Care? Seriously? Yes. I know, it’s not exactly fun dinner conversation.
When you’re healthy, active, and enjoying life, it’s hard to imagine a time when you might need help with everyday things like bathing, dressing, or getting around.
No one wants to think about that and so most people put this conversation off.
But here’s the thing… Your 50s are often the best time to learn about long-term care planning—not necessarily because you’re ready to buy a policy, but because you still have options.
For many people, the mid-50s can be a sweet spot for exploring long-term care insurance. You’re generally young enough that coverage may be more affordable than it would be later, and hopefully healthy enough to qualify for more options. Wait too long, and premiums may become significantly more expensive—or a health issue could make coverage difficult or even impossible to obtain.
That doesn’t mean long-term care insurance is the right answer for everyone. For some families, it makes perfect sense. For others, it may not. Some people choose to self-insure. Others prefer hybrid life insurance policies with long-term care benefits. Every family’s situation is different.
The important thing is to make the decision intentionally.
Not because someone scared you into buying something. And not because you ignored the conversation until your choices became limited.
Long-term care planning is really about asking a few simple questions:
- If I ever needed extended care, how would I want that care provided?
- How would I pay for it?
- What impact would it have on my spouse or family?
- Do I want to transfer some of that risk to an insurance company?
There is a lot of value in understanding your options while you still have the ability to choose among them.
Hopefully, you’ll never need long-term care.
But if you do, your future self (and your family) will be grateful that you took the time to think through the possibilities before they became realities.
The Bottom Line
Honestly, we know this probably wasn’t the most uplifting way to spend fifteen minutes. Ha!
Taxes.
Social Security.
Estate planning.
Long-term care.
These aren’t exactly the topics people get excited to think about. In fact, if someone told us they read articles like this for fun, we’d probably be a little concerned.
But you don’t have to solve all of these things today. You don’t need to become a tax expert or memorize the Social Security handbook. You don’t have to know every estate planning strategy or every type of long-term care policy.
You just need to start thinking about these topics while you still have options.
That’s what your 50s are all about.
It’s one of the last decades where you still have time to make thoughtful adjustments before retirement arrives. A few good decisions today can save a tremendous amount of stress and potentially a lot of money later.
So if you’ve made it all the way through this article, congratulations! You’ve officially tackled four of the least exciting (but most important) retirement planning topics.
Go reward yourself.
Seriously.
Take your spouse out to dinner. Go play a round of golf. Buy the quilting supplies. Get your nails done. Whatever makes you smile.
Then come back for Part 3, where we’ll finish this series with a few topics that are a little more enjoyable to think about: protecting what you’ve built, having meaningful family conversations, discovering what retirement is really going to look like, and making sure you have the right financial planning team beside you for the journey.
Retirement planning doesn’t have to be scary.
It just has to be intentional.
Our attorneys want us to remind you:
This article is provided for informational and educational purposes only and should not be construed as personalized investment, tax, legal, or financial planning advice. Every individual’s financial situation is unique, and the strategies discussed may not be appropriate for everyone.
Examples and scenarios are hypothetical and are intended solely to illustrate financial planning concepts. They do not represent the experience of any specific client or guarantee future results.
Investment advisory services are offered through Impact Wealth Management, a registered investment adviser. Registration does not imply a certain level of skill or training. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.
Before making financial, investment, tax, or estate planning decisions, consult with your financial advisor and other qualified professionals regarding your individual circumstances.