6. Don’t play catch up.
If someone has failed to save enough for retirement by their 50s, it may be tempting to build a portfolio full of stocks to play catchup. The financial experts interviewed by 24/7 Wall St. generally advise against this move. While some stocks are still important in a portfolio to help manage inflation, a bad stretch in the stock market can completely devastate a person’s financial goals. “That’s financial suicide,” Sestina calls such a move. “They can’t afford the risk with so little time.”
Middleton says he counsels his clients to take on as little risk as possible in order to reach their retirement goals. Someone who has not saved anything for retirement by age 50 would need to take more, but not excessively more, risk than someone who saved since they were in their 20s. “I just warn [clients] that the plan might not work,” Middleton says.
7. Beware of financial scams.
When people have not saved enough for retirement, they feel overwhelmed and are willing to take drastic measures to try to reach their retirement goals, including falling for financial scams such as the “get rich quick” and “work from home” schemes. Those ages 60 and older lost at least $2.9 billion due to these scams in 2010, according to a recent joint study from Metlife Mature Market Institute, the National Committee for Prevention of Elder Abuse and Virginia Tech University.
Setzfand says that when people are approached about financial products, they need to do research to make sure the product really can help achieve their financial goals. She also recommends people do some research on the broker trying to sell the product to make sure no sanctions have been levied on the broker. “If something looks too good to be true, it’s too good to be true,” Setzfand says.
8. Do not skimp on insurance.
While socking a higher portion of your income in your 50s may help build up a dream retirement fund, it is important to keep up with insurance payments in order to prepare for the unexpected. Such plans as life insurance and long-term care insurance can ensure a person’s spouse or children aren’t financially devastated in case of unfortunate events.
Since life insurance is relatively affordable, Middleton says he has not noticed many people going without it. However, he is concerned many are forgoing long-term care insurance due to its high cost. Middleton says not having long-term care insurance can “completely destroy an estate” if a spouse happens to need that level of care in the future.