At least a decade ago, someone, somewhere declared, “50 is the new 30!”
This rallying cry of baby boomers — the last of whom are turning 50 as I type — offers feel-good fuel for the midlife soul, except when we’re talking about finances. A 50-year-old with a net worth 20 years younger is not a good look.
When Carrie Schwab-Pomerantz turned 50, she asked herself what she wanted to accomplish during the rest of her life. The daughter of discount brokerage founder Charles R. Schwab grew up working at her father's company, so she may not have been overly concerned about financial security. She did, however, want to help everyone else who may be. She took her years of experience as a financial expert and with the input of colleagues at the Schwab Center for Financial Research, she has attempted to answer the 50 most common questions about money and life after 50.
"The Charles Schwab Guide to Finances After Fifty" (Crown Business, $25) is the result, and it is sure to help you start tackling some of your most pressing questions. Question No. 1? "I'm saving for retirement — but how much is enough?" Let's see. If you and your spouse spend $110,000 per year and plan to retire in 10 years with the same standard of living and you anticipate receiving $20,000 in annual pension, $30,000 in Social Security and $20,000 in rental income (or some other income source), you'll need to withdraw $40,000 per year from your portfolio. That means you need a portfolio of $1 million. Ouch.
Schwab-Pomerantz acknowledges that for many people, that number isn’t possible. Those people should probably skip to question No. 2: “I’m 50 and haven’t started to save for retirement. What can I do?” The answer will vary depending on a range of factors, but playing catchup to the tune of investing $23,000 per year is one option.
If those sobering numbers leave you feeling sorry for yourself, think about the more than one-third of people 55 and older who say they aren’t saving for retirement at all!
You should be thinking about these things at least 10 years before you retire, because by the time you are transitioning into retirement, your questions will change: “My kids are grown. Do I still need life insurance?” or “Should I be debt-free before I retire?” The answer, as usual, is it depends, but in her responses, Schwab-Pomerantz offers solutions for several scenarios.
For those who have already retired, she weighs in on everything from how to draw income from your portfolio to whether you should consider a reverse mortgage. Social Security and Medicare questions are dealt with in a separate section as is estate planning. Schwab-Pomerantz wraps it up by addressing the ways in which the people in your life can impact your finances whether it is children returning home, divorce after 50 or a widow planning to remarry.
The financial world is unnecessarily complex, says Schwab-Pomerantz. Make it easier on yourself by acting your age.
About the Author
