How to start financial planning at 50?
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Anonymous
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Here is my situation.
50 years old. Single. I have just moved back after living internationally for a few years. Own a mortgage free house worth about 600K - has rental potential as it has a fully equipped apartment in the basement Have 150K invested in a high interest savings account. No other investments. No 401K, no savings accounts. No retirement funds. Have 400K in cash currently sitting in the bank that is the profit from a recent property sale. No debt. Monthly expenses are pretty low. Two adult children, oldest is financially independent. Youngest I provide some financial support to but only ad hoc and not large amounts. Youngest (24 years old, was living with boyfriend who is soon to be an ex) may be moving back in and wants to live in the basement apartment. Need to buy a car. Current income is very low due to part time work related to moving back but my income will be $120K ish once I have a full time job again, hopefully as of January. Help me. |
Anonymous
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Get a full time job, max your 401K and Roth IRA.
Get a super reliable and inexpensive car... think Camry but not so low as a corolla. Work until you are 65, retire. |
Anonymous
Cars have gotten so expensive. I am trying to decide if I should buy new or used. Thinking maybe a 2018-2020 age with low mileage. I am working on the job now. Shouldn't be too hard in my field so I am sure within a few months I will be in full time work again. |
Anonymous
| Also though, not sure if I will have enough to retiure and live on at 65. Might have to move to somewhere with a very low cost of living. My family unfortunately has a long life expectancy with most living to mid 90s at least. |
Anonymous
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I would put 10k into ibonds (only sold theough Treasury direct) since that is a calendar year limit (and you can’t access them for 12 months), put the rest of the 400k into Vanguards treasury money market (4% interest right now) then focus on getting a job.
While you are looking you can spend time on bogleheads.org (the wiki and the forums) and once you have a job you can decide if you need to hire a fee only planner or if you now know enough to DIY. Job market is tough out there— good luck and take your time before making big decisions about what to do with your money. |
Anonymous
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Definitely start saving for retirement, in Fidelity or Vanguard. I would put a big chunk of your cash in. You want a job that gives a pension or generous matching retirement contributions.
I started a secure job at 43, and retired comfortably at 66. It’s great that you do not have to put kids thru college still. You can do this. |
Anonymous
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Start educating yourself by reading up. Plenty of financial sites out there, see Bogleheads.
I’d start by: Determine your average monthly spending. Set aside (or keep in cash or HYSA) 12 or 18 months, for now. If you have no income this year 2025, look at opening up a Roth IRA asap. Put in max. In there invest in low fee S&P index fund. |
Anonymous
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Will you be eligible for social security when you retire?
You’re not in a terrible position, promise! With a paid-off house and 500k to invest, you’re probably better off than most Americans. But you should get that money into a brokerage soon. Once you get a job, max out your 401k and IRA for the rest of your career. If you’re weighing two job offers, opt for the one that matches more of your 401k. |
Anonymous
This. I maxed 401k and IRA. HR asked if I was sure about 401k. lol. I lived on very little for a while to gain financial freedom. Congrats on paying off your home! If possible, have adult child pay you rent. At very least utilities. Camry is a great car. Few problems. A new one can be had for $35k. Create a backup plan if you get laid off due to ageism. |
Anonymous
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Ditto on the Bogleheads advice. I've learned a lot from that site.
Rent out the basement apartment and funnel proceeds into a mutual fund. |
Anonymous
| Have adult child move into their old room and rent out the basement to someone else to bring in money. Figure out how much money you need for retirement by figuring out your expenses, then figure out how much you will need pre-tax to cover those, then multiply your annual number by 20 (for a withdrawal rate of 5% a year) to give you a number as far as what you need saved for retirement. I'm guessing your Social Security will be minimal. |
Anonymous
Be careful of advice on this site. For example, if you have no income you can’t contribute to a Roth IRA. |
Anonymous
You’re exactly right. I meant to type ‘low’ not ‘no’ as OP typed they had low income this year. Thanks for correcting me. |
Anonymous
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1. Absent a true crisis/medical reason you need to cut off your 24 year old now. You don’t have enough cushion to adequately save for your own retirement and continue to support them and by doing so you are setting up the grounds for a situation where your older more financially responsible child may end up feeling pressured to subsidize you in your old age and resent both their sibling and you.
If you have an extra bedroom in the main part of your home they can temporarily stay in, fine (though they should at minimum kick in some money for utilities) but by no means should you let them use the otherwise rent generating apartment for free or give them additional financial assistance. 2. Reserve ~1 years worth of basic expenses in your high yield savings account and immediately start transferring the remainder + the 400k cash into the S&P 500 (if you’re so inclined you can mix in some other funds, but probably best to keep it simple). Max out a Roth IRA for this/next year and then put the remainder in a brokerage account. Fidelity and Vanguard are good low fee options. Use dollar cost averaging to spread the investments out over a year or so. 3. Set up a 401k with whatever company you end up working at and try to contribute the max (current 23,500) each year. Hopefully they will also have some kind of match. If you invest the initial ~$475k now and max out 401k contributions from now until 65 you’ll be on track to have ~2 million in retirement which allows for a safe 80k withdrawal/year. Coupled with a paid off home and some potential rental income you should be in good shape. (Obviously that assumes you’ll be able to stay gainfully employed at a decent salary until 65, which is by no means a guarantee, so the more you can invest in these earlier years the better.) |
Anonymous
| Can your 24 year old pay you rent for the apartment? I would tell her that she can live for free in a bedroom or pay rent for the apt as you need the income. I would give a discount bc it would be preferable to a stranger but explain that you need to increase savings etc |