There may never be a good time to make financial mistakes, but there are some completely disastrous times to make mistakes. One such time is when you’re in your 50’s. When you’re getting close to retirement, and there are fewer years to save and grow your money, financial mistakes can devastate your plans to leave work and relax into your golden years.
Once you know what might be considered a mistake, it’s much easier to stop yourself from making them. Here are 3 mistakes you should avoid at all costs once you hit 50.
Paying For a Child’s College Tuition:
If you have a college savings account with funds set aside to help your children through college, that’s a great way to help them out. But if you haven’t saved anything for their tuition, don’t be tempted to dip into your retirement savings to help them pay. It’s hard to say no to your kids, especially when they’re in need, but taking money out of your retirement savings puts your entire future in jeopardy.
Cosigning On a Loan:
From private student loans to auto loans, there are many opportunities for you to get dragged into the debt taken on by friends and family members when you cosign on their application for credit. Cosigning a loan isn’t just helping your loved one by improving their rates; it’s guaranteeing that you’ll step in and make payments if they default. While your loved one may never intend to do so, it can happen, and if it does, it will drag down your retirement.
Increasing Your Debt:
Debt is a reality of life, but it shouldn’t be a reality of your retirement. While a limited number of financial liabilities may make it into your retirement years, you generally want to avoid driving up your debt in your 50’s. Paying interest out of your retirement funds is painful, and when that interest outweighs what you earn on your savings, it can make a huge dent in your nest egg that can prevent you from living in comfort as you age.
Your 50’s give you one of your last chances to create the kind of retirement you’ve always dreamed of. Avoid making mistakes as much as you can and focus instead on giving yourself a more stable financial foundation so you know you can continue to care for yourself and you won’t be a burden to your loved ones in the future.
Edward Schinik has been with the Investment Manager since 2009.