Ladies – Do you have your Financial House in Order?
There are so many important items to check off that list, especially as we creep closer to mid-life.
I am joining the 50 club this year. There, I said it! Not much looking back, but I am really looking forward to my future. I think this is such an exciting time in our lives. Many of us will retire (or be very close to it), move to warmer climates, sell the family home and maybe even become grandparents in this decade. How exciting! Looking towards our future, we really need to make sure our financial house is in order.
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So where do we start?
Do you have it? When does your current term end? Your dependents may change during this decade and it may be only you, or only you and your spouse. You will want to make sure to provide for your loved ones. You may want your life insurance to cover any debt such as the mortgage or college expenses for any children that you are still providing for. Term life is good for temporary needs such as this.
Are you ready? More than likely, you will be retiring in the next 10 – 15 years. Do you know where you are financially right now and where you need to be? It may be in your best interest to sit down with an independent financial provider and nail down that financial statement and net worth and figure out what your goals are. Your real life expenses in retirement may be lower than they are right now. Will your mortgage be paid off? Will you be selling your house? Moving to a lower-tax state? This will all factor into your final figure that you want to retire on.
Diversification can reduce your risk by allocating your investments across different industries, different asset classes. In other words, do not put all of your eggs in one basket. Is it beneficial for you? Should you be moving your investments around so they are a little safer than they were when you were in your 30’s? Your risk should be less the closer you get to your actual retirement age.
Catch up contributions? Many of us, including myself, did not invest enough in our early years into 401k. Yea, we were thinking, that retirement thing, it is so far off. Then we had kids and time just flew by. Well, thankfully there are catch-up contributions after you turn 50. Currently, those of us over 50 can add an extra $6,000 per year on top of the $18,500 limit into our 401k. If you have a spouse, they can do the same thing! And you can contribute $6500 each instead of $5500 into an IRA. Compound interest is your friend! If you can, take advantage of that catch up contribution.
Debt paid off?
Speed it up, get the credit cards paid off if you are carrying a balance. Read about the “7 things to give up to become debt free” and “How to pay off debt with the debt snowball” to learn about becoming debt free. Your retirement years will be so much better if there is no debt left hanging over your head. Make a plan today to finish paying everything off, including your mortgage. Just imagine the freedom in retirement with no debt!
Long term care
Is it needed? This is a great time to start researching long term care. What is long term care? You may end up with a chronic illness or disability where you need long term assistance. It is a fact that we are living longer. You will need to consider your age and health, your support system, your income and savings and investments, and believe it or not, your taxes.
Up to date? Probably the last time you updated them, your children were minors. Check all of your policies and retirement accounts and all financial accounts to make sure names and information is up to date.
Up to date? I know the last time I updated mine, my children were little. Now one of those children is an adult and could care for her siblings if something happened to my husband and I. Assets and net worth may have changed drastically as well. Make sure your will is up to date to reflect all of these changes.
Do Not Resuscitate/Do Not Intubate – I know, I know. But it is so important! Make these decisions now so your family does not have to go through the agony and grief. Believe me, I have been there and it is heart-wrenching.
Power of Attorney
This is another one of those legal papers that must be done! A power of attorney is authorizing another person to act for you in a legal or financial capacity, that person would control your legal affairs in your absence.
If you do not take care of the finances in your house, do you know all pertinent information? Financial documents – locations? Phone numbers of CPA or investment professional? Passwords, checking/bank account numbers? If you do keep track of all the finances, make sure that everyone important in your life knows where you keep this information. I keep a binder with all of this information in it, so if something happened to me, or my husband, or both of us, someone could grab this binder and have everything at their fingertips.
While this list can be daunting, it is so important to get everything in order so you can relax into retirement, at whatever age that may be!