Creating a Financial Plan
If you’ve hit the half-century mark, you might be closing in on retirement. In fact, the average American retires at age 62.1 With that horizon in sight, do what you can now to make the future as bright as possible.
Here are three tips to help you protect yourself in these crucial years:
1. Know how much you’ll need.
Now that you’re in the homestretch of your career, you need to assess how well you’re positioned for retirement. Too many Americans are just guessing and hoping for the best. A mere 39% have taken the time to calculate the amount they’ll actually need to live comfortably.2
2. Play catch-up.
In a survey of baby boomers, only 24% expressed confidence that they would have enough money to last through retirement.3 And most of them said the one thing they would have done differently is save more. If you feel that you have fallen behind, there are still steps you can take to gain some ground.
Take advantage of catch-up contributions. If you’re 50 or older, you can contribute a maximum of $25,000 to your 401(k) each year. That’s $6,000 more than other workers are allowed. You can also invest an extra $1,000 in your IRA each year, in addition to the standard limit of $6,000. This is a great chance to give your retirement account a big boost.
3. Plan for long-term care.
No one likes to talk about it, but more than half of all 65-year-old Americans will need long-term care at some point in their lives.4 So it’s not too soon to think about how you could cover that expense.
As you turn the corner into retirement life, keep your eye on the prize. Fun fact: Our recent Wisdom of Experience survey found that investors who take the time to visualize what their ideal retirement would look like recommend saving 31% more than those who are putting money aside without taking time to consider what it’s for. So close your eyes, picture that beach house, world tour or family reunion, and set your sites (and your investments) on making it happen.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice.