David Lerner Associates: Financial Planning in your 50s

David Lerner Associates: Financial Planning in your 50s

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There are financial challenges in every decade.  These three financial resolutions address the challenges that are common in your 50s:

Make that final push to top off your retirement savings

After a lifetime of diligently saving, the day when you can enjoy the retirement you’ve been planning is just around the corner. “The 50s represent the stretch right before the final mile or so of a marathon,” says David Lerner Associates Executive Vice President Martin Walcoe. “This is when runners want to prepare for a strong final push that will carry them successfully to the finish line.”

Unlike individuals in their 30s or even 40s, 50-somethings have a much smaller window of time left in which to save and invest for retirement. “In other words, time definitely is not on your side,” says Walcoe. “Therefore, saving as much money as possible for retirement should usually be a primary financial goal during this life stage.”

If possible, consider contributing the maximum amounts allowed by law into your qualified retirement plans. For tax year 2016, the annual IRA contribution limit (for traditional and Roth IRAs combined) is $5,500 (or $6,500 if you’re 50 years of age or over),  while the annual 401(k) contribution limit is $18,000 (or $23,000 if you’re 50 years of age or over). Keep in mind that you have until your tax-filing deadline, April 15th for most people) to make your qualified plan contributions.

Re-examine your asset allocation mix. Not only do you have less time in your 50s to save for retirement, but you also have less time to make up for potential losses in your retirement portfolio.  It may be wise to begin gradually shifting your asset allocation mix away from investments that may feature more short-term volatility (like equities) and toward those that generally have less volatility, such as fixed-income investments (like bonds) and cash equivalents. “While fixed-income instruments and cash equivalents generally offer lower return potential than equities, it may also lower risk, which is often important at this life stage — especially as you enter your late 50s,” says Walcoe.*

“If you haven’t saved as much for retirement by now as you’d hoped to, you might have to accept a higher degree of risk and volatility to achieve the returns necessary to meet your retirement savings goals.”

Enjoy some of the fruits of your labor. This life stage represents the “sweet spot” for some people. They are in their peak earning years, and their children have left the nest and perhaps even finished college. People in their 50s may have more financial flexibility and more discretionary income than at any other time in their lives. While it’s important to try to max out your retirement savings (as noted above) and maybe even try to pay down the principal on your home mortgage, it’s also important to “live a little” during this life stage, if your finances permit.

You have probably been working hard your whole adult life to pay the bills and raise your family. If you have done this successfully and are saving diligently for retirement, you might want to splurge a little and take a nice vacation or buy a big-ticket item. It’s all about finding the right balance in your life between financial responsibilities and enjoying the fruits of your labor.”


*Bond prices move inversely to interest rates. Long-term bonds are more exposed to interest rate risk than
  short-term bonds.

 Duration is the risk associated with the sensitivity of a bond’s price to a one percent change in interest
  rates. The higher a bond’s duration, the higher its sensitivity to changes in interest rates.

 Investors who decide to sell prior to a call or maturity date may receive more or less than their original   investment depending on market conditions and any mark-ups or mark-downs to the price of the bonds.

 Many municipal bonds contain call features which allow for the bond to be recalled or retired before maturity at the discretion of the issuer.

Credit risk—This is the risk that an issuer will default or be unable to make payments. The credit of the bond is backed by the municipality issuing the bond. The issuer of the bond must remain solvent in order to pay investors. Investors should consult with their investment counselor as to the credit risk or risk of default with a particular issuer.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC.


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website: www.davidlerner.com

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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