As people turn 50, many of them have concerns about how to save for their retirement. While many Americans are entitled to social security benefits, this alone may not be enough. In order to supplement this income, retirees need to have saved money to spend during their older years. Those over the age of 50 need to know how to best save money for their coming retirement. Here are some of the best ways to save for retirement at the age of 50.
Matching 401(k) Program
One of the best ways to save money for the future at any age is to contribute to an employer matching 401(k) program. The money is taken from a person’s income before taxes, which also saves money by reducing the tax burden. The majority of employer 401(k) programs offer some kind of percentage based matching contribution. For example, if an employee contributes 6% of their pre-tax income or universal basic income to their 401(k), an employer may match half of that amount. Since this is essentially free money to the employee, a 401(k) investment should be the first consideration for savers over the age of 50.
Roth IRA Account
Another pre-tax option that can assist people over the age of 50 looking to retire is a Roth Individual Retirement Account (IRA). This savings account is typically made up of a diversified portfolio of investments. A Roth IRA is particularly attractive for retirees because there is no tax penalty for withdrawing money after the age of 60. There are also no capital gains taxes on any growth over the principle. Management fees for these types of funds are also typically very low. These factors make Roth IRAs a practical way of contributing to a retirement savings plan over the age of 50.
Health Savings Account
A health savings account can be a great help for savers over the age of 50 looking to plan for their retirement. Similar to a 401(k), money can be taken out of a paycheck before taxes and put into this account. This money can then be used to fund any doctor’s visits outside of your senior home care. This can help in the long term as frequent check ups can preempt expensive health issues before they become an issue. Some employers also offer financial incentives like matching contributions or rebates for these accounts. Would be retirees should consider using health savings accounts to save money for their retirement.
Real Estate Investment Trusts
Real estate investment trusts can be a safe long term investment strategy to save for your retirement. Rather than owning a building or plot of land alone, would be retirees can invest with others to reduce the overall risk. These trusts can also pay out dividends similar to stock investments. Retirees with more working capital can also choose to be the sole owner of a piece of real estate. They can then use this to generate passive income through rent in retirement. Investing in real estate can be a powerful tool for saving money for retirement for those over 50.
Long Term Bonds And Stable Stocks
Investing in long term bonds and stocks that don’t fluctuate too much can be a viable way to store money long term. US government bonds are particularly stable and have only defaulted once in the country’s history. Depending on the length of the bond, savers can also expect to make modest returns on their investments. Slightly better returns can be found in managed stock portfolios investing in overseas stocks. Many areas of the world contain companies who’s stock price doesn’t change much but the stocks do pay dividends. These stocks and bonds can then be sold off as needed in retirement. Of course, you can also look into how to trade OTC stocks as well. Keeping money in stable, low risk investments is a good way for would be retirees to save their money.
Saving money for retirement at or after 50 can be a complicated task. Would be retirees should evaluate their current income and expenses, and then choose a plan that works for them. They can invest in employer matched 401(k) programs in order to grow their money tax free. Similarly they can put money in a Roth IRA in order to avoid the capital gains tax. Employer rebates on health savings accounts can be a good way to save money and fund old age related healthcare costs. Real estate trusts can provide an extra source of passive income while mitigating the risk normally associated with real estate investment. Finally, government bonds are a stable way to store money while earning a small dividend. Using these methods, people over the age of 50 can save money for their retirement.