Financial Planning - You are in 50's
Business
- On Feb 20, 2025
- By Avinash Kumar
Financial Planning - Smart Financial Moves in your 50's
Time to Review you Financial Standing
I think you are getting serious about your upcoming life stages day by day. Lots of Responsibilities are waiting for you to get honor viz children are between 15-20 years of age, All big and serious expenses are standing in front of you to eat your hard earned income like their:
Higher Education Expenses,
Their inflated pocket money requirement,
Their sabbaticals,
Your parents may be dependent on you and your job will be only for next 10 more years. Person feels more comfortable if they had planned well for the important milestone in advance but if not, then there is a big Question Mark opens its mouth.
Financial Planning in this decade is hugely important. This is the time to take a thorough look at your future and make some important decisions. Review your financial plan to ensure you are on track. It’s important to assess your tolerance for risk taking, and to avoid making bad money choices. Although you may be taking care of aged parents, don’t forget about saving for your own retirement.
Saving and investing in your 50's
Short and medium-term savings:
Your 50's should be a time for reaping the rewards of your hard work. Consider savings for the following:
Paying cash for a vehicle and other important unforeseen expense.
Holidays to celebrate after your upcoming retirement.
Grandchildren are about to get enter into your family in next 10-15 years.
Insurance in your 40s:
In addition to medical and disability cover, life cover is critical in ensuring your loved ones and dependents should be covered, you cannot be around enough to look after them.
If you are a home owner, building and household content cover should be a priority.
Health cover is an important addition to these policies.
Long-term savings and investments:
For example if your monthly expenses right now are 50K p.m. then you should have Rs. 1.58 Cr as corpus at your age 60. If you think it’s hard to accumulate, then you are wrong just 67,900/- pm will help you to accumulate this corpus @ 12% p.a. in next 10 Years. It will give you inflation adjusted per month amount for next 20 years.
Review your risk exposure in your investment portfolio as you have more to lose at this stage, and it could take longer to recoup losses from risky investments.
You should be aiming to pay off property, so you have fewer expenses leading up to retirement. You should not have any debt to repay at this stage i.e. No Home loans, personal Loans, Vehicle loans, or any other loans. Only assets or accumulation to Retirement.
You should keep in your minds about Insurance in your 50's
Ensure your home, its contents and your vehicle are insured, and the premiums up to date (Insurance should be at the market or actual value of house/contents).
Adequate Term coverage is must for any eventuality and it should cover until you fulfil all of your social and personal responsibilities. It should be your Net Present Value (NPV) of your Household Expense till last survivor plus NPV of children’s education and Higher Education expenses Plus Health Expenses that health plan doesn’t cover.
In my 20s I thought I knew what I was doing.
In my 30s I would do anything to make money.
In my 40s I only do what I love doing.
You find what you love by going back to what you loved in your twenties and keeping expectations low.