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3 Essential Finance Moves to Make Before You Turn 50

Motley Fool - Tue Mar 26, 6:00AM CDT

mature woman lying down on deck with her head resting against a beagle -- pet dog owner

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If you're in your early 40s, the idea of turning 50 might seem scary. If you're in your late 40s, you may be more in acceptance mode.

Either way, the financial moves you make in your 40s could be crucial to your 50s and beyond. So aim to do these things before your 50th birthday arrives.

1. Make sure you're in a good place with retirement savings

Fidelity recommends having six times your salary saved for retirement by age 50. Depending on your current individual retirement account (IRA) or 401(k) plan balance, that might seem like a tall order. But if you're able to hit that goal, it might take a lot of the pressure off of saving for retirement during your 50s and 60s.

Let's say you make $80,000 a year and can sock away $480,000 for retirement by age 50. Let's also assume you want to retire at age 65. Over the past half-century, the stock market (represented by the S&P 500) has averaged an annual 10% return, so it's fair to assume that your portfolio might do the same. In that case, if you leave your $480,000 balance invested at 10% a year for 15 years, you'll end up with just over $2 million, even if you don't put another dollar into your retirement account during your 50s and 60s.

In fact, if you have kids who will be in college when you're in your 50s, you may want the option to use all of your spare income to pay for their education. If you save enough by age 50, that option may be on the table.

2. Make a career change if you're miserable

It's more than possible to work in the same field for decades without truly being happy. And while you may be resigned to not loving your job, the reality is that you deserve to spend the latter part of your career doing something that brings you joy. You can technically make a career change at any age. But you may have more success making a change by age 50 than doing so in your late 50s or early 60s.

Unfortunately, employers are sometimes hesitant to take a chance on workers who may seem to be on the verge of retirement -- and even more so when they're new to the industry at hand. So take the time to think about how satisfied (or not) you are with your career. And if there's something else you've always wanted to do, take that leap if you can afford to financially.

3. Start thinking about what you want retirement to look like

You don't need to have a full-fledged retirement plan by age 50. But at that point, it's good to have a basic idea of what you want your senior years to look like. That could help inform other decisions you make during your 50s.

For example, let's say you decide you want to relocate to a different part of the country. In that case, you may not have to push yourself to pay off your mortgage in your 50s, since you'll be planning to sell your house anyway.

Or you may decide that you want to live in a more expensive area. That might motivate you to ramp up your retirement savings in your 50s rather than hold your contributions steady or scale them back.

Getting to age 50 is truly something to celebrate. But before that milestone birthday arrives, assess your nest egg, pursue a career change if you're not content with your current job, and try to at least get a basic picture of what your retirement plans might entail.

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