Financial planning at any age: your 50s

You've done it! The decades of hard work you've put in during your 20s, 30s, and 40s have helped set the stage for the last leg of major financial planning for retirement. The list of expenses you have will start to change based on your new priorities and personal financial plan. If you have kids, for example, they're likely out of the house and financially independent now to take some strain off of your budget. Perhaps you chose to focus on your career, or do both, and have a retirement package waiting in the wings in the next 10 or so years.

Regardless of the journey, you're here now, and the needs of financial planning in your 50s will vary from every decade prior. Your savings and income streams are more important than ever as you transition to a less work-oriented lifestyle. Even if you plan on working in retirement, it's important to know how to make a financial plan to prepare for when your body says it's time to take a break.

Know where you are

If you don't know where you stand financially, you'll probably struggle to set realistic goals going forward. Everyone's road to retirement in their 50s looks different. You don't need to have multiple types of savings or investment vehicles to benefit from a quick self-audit of your finances. Don't let unknown debts or assets stay under the radar.

To get started, focus on the accounts you actively use and have documentation for. You'll likely have the option to login and view your account details on each company's website. Otherwise, your bank cards, account documents, and statements will likely have a customer service number listed that you can call.

Verify the status of banking and transactional accounts, including:

• Checking and money market

• Savings, certificates of deposit (CDs) and health savings accounts (HSAs)

• Credit cards and outstanding debt such as vehicle, mortgage, personal and home equity loans

Outside of these are accounts used primarily for wealth management and retirement planning, such as:

• 401k plans

• Roth and traditional IRAs

• Annuity and pension plans

• Investment portfolios including those for stocks, real estate and business endeavors

The snapshot you'll create from taking a moment to review each account's balance is an easy way to see how strong your financial footing is. It's also recommended that you request your free annual credit report from each reporting agency. You can do so at the federally-sponsored website, annualcreditreport.com, and the report will show you any negative remarks or fraudulent activity you need to take action against.

Now that you know where your starting line is, it's time to map out how you'll reach your end financial goals. You'll likely use the same planning skills you've honed over the years, but this time with new variables (but no worries, you're used to adapting!).

Create a budget

That's right, budgeting is still going to be your strongest tool in financial planning for retirement. It's the backbone of your personal financial plan while also guiding you toward future goals. What you add to your budget depends largely on where you currently stand financially. If you still have debt you anticipate taking into retirement, you may want to budget for extra payments to pay it off early.

Not only does an earlier payoff mean one less thing to worry about, it also reduces your monthly expenses. You’ll likely want to use your savings for retirement itself, not to pay off debts and remove your liquid safety net. You can start with the debt earning the most interest to lower the overall amount you have to pay. Refinancing large debts such as mortgages is another option to reduce payment and interest rates simultaneously.

Since loan payments are often the highest monthly expenses you'll have, you can now focus on lowering expenses elsewhere. Take a look at your monthly bills and see how much you're paying for:

• Groceries

• Cable and internet

• Phone plans

• Subscription services such as Netflix and Amazon Prime

• Insurance

The goal of retirement is to enjoy your time as much as possible. Use the Marie Kondo litmus test: if you see high spending in a specific area that doesn't necessarily bring you joy, eliminate that cost or allocate it to something you'll enjoy more. Cutting small costs like these can quickly add up and help pay off debts as part of your financial plan.

Set financial goals for your 50s

Financial planning in your 50s is all about keeping your eyes on the target and making sure not to stray from the path. The financial goals you set help you stay the course and reach retirement on time. The ultimate goal is to sustain a comfortable and financially independent life in retirement.

It's likely that you already plan on tackling debts first and foremost. It could be from credit cards you've used on vacation or a car loan taken out to get a celebratory new ride for retirement. Either way, making it a goal to be as debt-free as possible before retirement is an easy way to stay on track. Just remember not to drain your savings or investments just to pay off loans, especially low interest ones.

On the other side of planning is income, aka all the funds you have at your discretion. Pension and retirement packages from your career can help immensely in this department, but you may need more to live the retirement of your dreams. You can work with a financial planner to see how your assets could be invested to create an additional source of income through dividends.

Other income options include a post-retirement career doing something you enjoy or investing in real property that you can spend your spare time managing and maintaining. Social Security benefits are another form of income to consider.

The key to reaching any of your savings or income goals is to reduce your expenses first. This is in order to dump the extra into debt payments or to bolster savings and investment portfolios. Your annual 401k and IRA contribution limits also increase when you're over 50, letting you catch up to your goals. Every dollar means even more now that you're so close to the finish line.

Protect what you have

Bouncing back from an unexpected emergency expense can be more challenging once you've left the workforce. Previously, you could simply put in more hours or use savings that you'll replenish to cover the costs. Now though, you'll need some assistance to avoid taking on new debt without reducing your overall assets.

This assistance comes in the form of insurance that goes above and beyond what you're possibly eligible for through government-sponsored senior care programs. If you have pre-existing conditions that won't be covered by Medicare, a supplemental long-term care plan may be needed. It's important to note that most insurance plans don't directly cover assisted-living facilities, so be sure to discuss it with your financial planner ahead of time.

A health savings account (HSA) can help protect your assets by giving you a tax-deferred place to set aside a medical budget. Even if you don't have the full amount available, many hospitals can work with you on the final medical cost through reduced pricing or payment plans started with your HSA funds.

There are several other types of insurance that you can take out depending on your budget and lifestyle preferences. If you plan on retiring with Fido and Fluffy by your side, pet insurance can help cover emergency vet visits. Travel insurance can be taken out to help pay for expenses caused by canceled flights or unexpected weather. For everything else, there's umbrella policies that could increase your coverage across a majority of situations you may be found liable for.

Protecting your retirement accounts and personal assets is done to preserve the reward of your planning and leaving something behind for your loved ones. But even how your assets will be passed down needs planning to ensure everything goes smoothly.

Put an estate plan in place

Having an estate plan drawn up is another key pillar in how to make a financial plan for retirement. Even if you let your wishes be known to those around you, it can lead to conflict if these wishes aren't outlined and finalized ahead of time. An estate plan lets you detail exactly how you'd like your assets to be handled upon your passing.

Estate plans can be viewed as a more intense version of a traditional will. You'll have the ability to list all of your possessions down to the smallest pieces you want passed on. Each one is assigned a recipient and the items can range from a stack of cash to your beach pad in Key Largo. Placing these items into an estate adds legal backing to your decisions and may help to avoid probate, depending on your state.

Probate is a state process that legally reviews the assets left behind by the deceased, along with the documents that state their final wishes. This comes with additional fees and the possibility of personal information being revealed to others involved with the inheritance proceedings. It may be important to discuss how to best use an estate plan with a lawyer or financial planner to avoid probate and make the process seamless on the other side.

An additional variable not everyone will have is whether or not you're the caretaker for children or any other dependents. Your estate plan can outline how they should be cared for in your absence. If you already have a will or estate plan in place, review any sections related to child care if you no longer have a financial responsibility for those grown kiddos.

While most of this financial planning for retirement is the same between states, estate planning and how assets are processed after death can vary drastically. Always take time to consult tax or legal professionals regarding your specific state's rules and regulations your estate will be subject to. Setting up a trust may be a better option than passing on wealth directly, so you don't have to wait on your estate planning any longer than needed.

The final word on financial planning in your 50s & beyond

The level of detail and planning you'll need to get ready for retirement is unique to your personal goals and financial standing. A good starting point for anyone is to reduce monthly costs and outstanding debts as soon as possible. You can work out what you actually need and create a monthly budget around it that also includes extra payments on debts.

From there, you can work on creating additional income streams through post-retirement work, market investments, or property management. Withdrawals from pension and personal retirement accounts could be scheduled and adjusted based on your budget's needs. Once you have everything set up, review what assets you plan on leaving behind to put together a will and estate plan. Always remember to review your state's laws when consulting a professional about your estate.

Following these tips on how to make a financial plan can provide you with a clear path forward now and in the future. It's never too late to start planning for your retirement, but the sooner you can start, the better off you (and your retirement bucket list) can be.