6 Financial Mistakes You Should Avoid in Your 50s
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3. Delaying Retirement to Pay Your Child’s College Tuition
You might want to help your children, but ultimately you are going to put a hindrance on yourself. By paying heavy college tuition fees you’ll delay your retirement by working extra years as you won’t be able to afford to retire on time.
If you can afford to help pay your child’s way, then, by all means, do it. But don’t let it mess with your retirement savings. It’s impossible to predict the future, and despite being in good health now you could be forced to take an early retirement for a number of reasons.
You wouldn’t want to be forced to keep working until you are 70, would you? Your children have time on their side, and in time they will pay back their student loans and start retirement funds of their own. But, you don’t have that luxury. To help with college tuition you can use a financial tool like Personal Capital to figure out how much you can spare without affecting your retirement plans.
4. Paying Off Mortgage Before Other Loans
A lot of soon-to-be retirees make it their priority to pay off their mortgage before they retire. But in this process, they might be neglecting other loans that have higher interest rates and will ultimately cost them more.
Lots of people who are thinking about retiring want to tackle the mortgage first because it usually has the biggest capital balance, but due to smaller interest rates it poses less of a threat. Instead, credit cards, personal loans, and student loans all come with much larger interest rates – that is room for growth.
Instead of focusing all your efforts on one of your debts, take a snowball or avalanche approach and set yourself the task of becoming debt-free by 60, instead of just mortgage-free. If you are more proactive in your 50s, you can save every penny you make in 60s and end up with a larger cushion for when you retire.
