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Managing Money in Your 50s and 60s: how to finish strong

Managing Money in Your 50s and 60s: how to finish strong

January 04, 2021

We’re wrapping up our series of money conversations with the Des Moines Financial Advisors at Compass Financial Services by focusing on money management in your 50s and 60s. Until now, retirement may have seemed like a far-off goal. Now, you may be thinking about it a little more often, maybe with a mixture of excitement and apprehension! Here, Compass Advisors discuss several items to keep in mind as you approach retirement age.

How does investing change when you get into your 50s?

Guy Leman: “For some reason, 55 seems to be the magic age where people start to take retirement really seriously. There is a flourish of activity to figure out where they sit and what are the actions needed to propel them into retirement.”

Caleb Pearson: “Most people do a lot of their retirement planning in their 50s and realize they have either done a good job saving or have some catching up to do. At this point in their career, their earnings are presumably the largest they have ever been and they are saving more than they have in the past. Investments tend to begin shifting to something less aggressive and/or income-focused as they approach 60.”

Guy: “The 50s are traditionally the highest-earning years, so it is a critical time to really sock away as much as possible. There is often a feeling that time is running out and often a propensity to be super aggressive with investing. I want you to be aggressive with the amount you are saving, and to follow your long-term investment strategy.”

Kurt Pearson: “The closer we get to a destination, the more important it becomes that we dial in the details. Younger investors can set a general target, as the decades unfold in our lives, specificity becomes the watchword.”


What should a 50-year-old who wants to retire at age 63 be doing? 

Guy: "Those who want flexibility to retire before the traditional retirement age of 65 or 67 need to continually build flexibility into their retirement plan. This often means taking advantage of extra amounts that are available to those 50+ in company retirement plans like 401K’s.”

Kurt: “Matching our expectations to the reality of our situation is always important, especially if time is limited. There are tendencies to act out of desperation. This rarely works and can easily lead to emotional decisions fraught with risk.”

Guy: “Another thing that is particularly important is developing a net worth statement. This document tracks your assets and liabilities year after year. You can use this document to track progress through your 50s towards your ultimate goal.”

Caleb: “I would recommend that doing a retirement plan to gauge your current financial situation and see how well set up you are for retirement. This is important. It will give a 50-something insight into what they need to do to achieve their goal of retiring at 63.”

What if a 54-year-old has done no saving or investing until now? Is it too late? 

Kurt: “It is never too late to do the right thing. As long as you have some time at your disposal, there will be options. The key is to know your options, explore the details of each option, and begin making positive choices.”

Caleb: “Better late than never! Though there is not a lot of time left, it is important to start putting money away to supplement other income sources in retirement - like Social Security, part-time income, etc.”

Guy: “I agree, it’s NEVER too late to get started, however, someone in this situation has missed the most powerful thing that investors have on their side. Time. A 54-year-old just getting started will typically need to work longer than normal, so factor that into your plans.”


Finally, what do you recommend that a 55-year-old do to work toward a fully funded retirement? 

Guy: “This advice goes for any age, really, but as one approaches the decade before retirement, building multiple income streams from independent sources is the most important thing. If you have replaced your active income with income streams from other sources, retirement becomes a pretty seamless transition.”

Caleb: “Keep putting money away and diversify the different types of accounts you have for tax flexibility (IRA vs. Roth vs. Non-retirement accounts).”

Kurt: “All 55-year-olds benefit from looking at their finances from a broad perspective. As the ‘accumulation’ phase of our financial journey begins to wind down, the ‘preservation’ phase begins to surface. This transition is crucial and requires some adjustment in our thinking. One of the adjustments is from a focus on the value of our investments to the amount of income each investment will produce. Matching income sources to monthly expenses is the key to a stable retirement.”

Retiring when you want and how you want requires a thoughtful approach, careful planning, and smart investing through every stage in your life. Working through your plan, exploring your dreams, and getting your questions answered is where an experienced financial advisor can help. Financial Advisors and CERTIFIED FINANCIAL PLANNERS ™ at Compass Financial Services are here to listen and work with you to pursue your goals. Give us a call at (515)327-1020 or Contact Us for a free, no-strings-attached financial planning consultation.  


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

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