Six Money Must-Do's For The Middle Aged

It's easy to understand why retirement doesn't loom large on the horizon for 20-somethings. Young workers are more concerned with kick-starting careers, not ending them in the long-distant future.

​And in your 30’s, there’s probably extra mouths to feed and debt to reduce.

But what about your 40’s and 50’s. You are probably at the height of your career and there will never be a better time. So bite the bullet. 

Here are 6 Tips that will get your financial house in better order.
 
1. Spot the challenge
Many people think that their biggest financial challenge is paying off their mortgage, but it’s not. 
 
It’s actually losing your income.   
 
And it will happen to us all when we retire. This lost income will dwarf any previous financial challenge you’ve experienced.  You may need up to 25 times your required income in capital to have the same lifestyle in retirement.
 
2. Beware Gerry Harvey
You don't need a new car but you sure do want one. Those expensive shoes - you've just got to have them. That newest electronic gadget. You really don't need it, you just really want it.

So before you let Gerry Harvey reach in to your pocket again, take a look at how much things really cost over time.

How about the car you drive? Let’s say you purchase a new vehicle every four years. If you saved $10,000 every time you bought one you would save over one hundred thousand dollars over the next 20 years.

Imagine saving $300 per month on your mortgage. Over 20 years, you would have an extra $125,000 in your pocket. That's a lot of change.

So next time, before you buy something really big, answer this little question:

“Do I really need this or do I just really want it?”
 
3. We just don’t die like we used to.
If you are five years from retirement, what is your investment time frame? Anyone say 5 years. Well, it’s actually 5 years plus the 25, 30 or 40 years you’ll be in retirement. 

That is a very long time to support yourself financially, so invest in those things that perform best over the long-term. That’s shares and property. You still need to diversify though.  Owning a broad portfolio of share, property and fixed interest investments is less risky and more likely to produce better and more consistent returns over time.

 4. Keeping a lid on taxes and costs
Costs and taxes matter. They matter a lot. Day to day moves in the market are temporary, but costs are permanent. Over time, they can put a real dent in your wealth plans. 
 
5. Ditch your percentage based adviser
One of the biggest rackets in the financial advice industry, hiding in plain sight, is percentage fees. While recent changes to law have forced some advisers to "fee for service", the problem is that this almost always involves taking a percentage of each client's' money directly instead of being paid out by the product manufacturers as sales commissions. Exactly the same result for the client, just called something different. There are problems with this:

• Those with lots of money pay more than those with less, for a service that costs the same
• Advisers are over-rewarded for rises in the market they are not responsible for
• Most people don’t understand percentages and think that 1 per cent may not be much
• By only being paid for the money invested, advisers are naturally inclined to maximise that amount.

 
6. Eat your greens
Health helps wealth. 

Not only does health have a major impact on satisfaction with life in retirement, medical expenses tend to grow as you do. Medicare data shows that of all the money you'll spend on healthcare during your lifetime, 30 per cent will be spent in your final six months.

You should focus on your health as much as possible so you can enjoy life to the fullest extent in your later years.  While none of us can predict how healthy we will be in the future, you can help influence the outcome by making lifestyle choices now that promote good health.
 
CONCLUSION

Retirement ought to be a happy time.  It should be a time when you are able to fully devote your energy and finances to doing the things you love. So make sure you have a plan before you retire and by following these few simple tips, you too​ can maximise the chance it's a happy one.

Did we miss something? If you have any extra tips, please share them in the comments below.

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