How To Go From Middle Class in Your 50s to Wealthy in Retirement
Written by
James Holbach
Edited by
Chris Cluff
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When you’re young, retirement is something of an abstract concept. It’s hard to imagine where you’ll be financially all those decades later.
By the time you’ve reached your 50s, you probably have a better idea of what your retirement will look like. If you’re a member of the American middle class, you’ll probably be able to retire — but maybe you’re dreaming of retiring into an upgraded lifestyle. There’s not a lot of time left to do it though, and you may be wondering if it’s even possible.
It may not be as difficult as you think.
Patrick Yono, founder of Sure Life Financial, says many people actually underestimate how good of a position they’re in after decades of hard work.
“For those who have children, your children are nearing or at the age where they are mostly independent,” Yono said. “For those who own their home, most have built at least some equity, and many have built a substantial amount. People in their 50s generally live a more stable life than those in their 20s, 30s and even 40s — so their income and their anticipated expenses are more predictable.”
See more about how to become wealthy by retirement.
Define Wealthy
Before you can figure out what you need to do to retire wealthy, you need to decide what being wealthy means to you. Wealth is a subjective concept that doesn’t look exactly the same for any two people. It might be the ability to travel, upgrading to a nicer home, financing an expensive hobby or even simply having a sizable estate to leave to your loved ones or a charitable cause.
Whatever the case may be, it’s a critical first step to figure this out. At this point in your life, it’s going to take a focused effort to achieve an ambitious financial goal. You’ll need to have a clearly defined vision of where you’re trying to go if you want to have the best chance.
Assess Your Financial Position
Once you know exactly where you want to go, you’ll need to figure out exactly where you are. That means having a clear view of your income and expenses, the amount and type of investments and savings you currently have, and what your risks and opportunities are.
“The best advice I can give is to seek out a financial professional that will meet with you and get to know you personally,” Yono said. “At this point in your life, the value that a financial professional will bring to your household will far exceed any cost you might incur.”
Yono noted that a professional can not only help you build the most accurate possible snapshot of your current financial position, he or she also can develop a comprehensive plan for your retirement and estate, giving you a clear path forward.
Step Up Your Savings
The one surefire way to have more money in retirement is to save more right now. You’ve probably identified some unnecessary expenses during the planning process. Start investing those cost savings immediately so they have as much time as possible to grow. If you’re sitting on an excess amount of cash, be sure to invest that as well.
You also can look for ways to make more money. Start a side hustle, monetize an existing hobby or even look for a weekend job. It’ll be tough; but, if you can stick it out for a few years, the extra money might turbocharge your savings.
Don’t forget that there are already policies and programs in place to make it easier for those over 50 to save more. For tax-advantaged accounts like 401(k)s and Individual Retirement Accounts (IRAs) you can take advantage of something called a catchup contribution that raises the maximum amount you can put into the account each year. You’ll not only be saving more, you’ll be reducing your overall tax burden.
Get Insured
It might sound counterintuitive to recommend spending money on insurance at the same time you’re trying to save more, but a major unexpected expense can delay or even destroy your ability to retire wealthy. Review everything you have covered and identify everything you don’t so you can make sure you’re protected.
Jordan Mangaliman, the CEO of GoldLine Financial Services, notes that there are a lot of things you might need to cover.
“Proper insurance protection includes health insurance, life insurance, Medicare, long-term care, car insurance, disability insurance, home insurance and more,” he said.
Again, don’t be afraid to consult a professional advisor for expert help if you’re not sure where to begin.
It Can Be Done
Going from middle class working adult to wealthy retiree isn’t going to be easy, but it is possible. With enough planning, saving, investing, protection and a little bit of luck, you can achieve the retirement of your dreams.
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