Birthdays that mark a new decade tend to prompt personal reassessment: In your 20s, starting your career may have been your focus. In your 30s and 40s, maybe it was the big goals you wanted to reach with your family.
But by 50, you may already feel like you’ve got it figured out. You make a good salary, you’ve reached many of your life goals and your kids are on their way to independence.
But there are still a lot of money truths left to learn, especially as you’re approaching your retirement years. Plus, times are changing: What was a financial truism in your youth may not be the reality now.
So we asked several CFPs to reveal 10 crucial things that could affect your money once you enter your 50s, both the bright spots and the potential pitfalls. Read on to see where you might need to be better prepared.
1. The cost of long-term care insurance
While it may not be the most pleasant thing to think about, how you plan to cover potential eldercare costs like a nursing home or a home health aide should be on your radar, stat. Long-term care insurance can help pay for so-called “custodial care” services like those, which are often not covered by Medicare—but the longer you wait to buy a policy, the more expensive it’s likely to be.
“It’s something to start thinking about even prior to age 50,” says Chuck Roberts, CFP®, founder and C.E.O. of Financial Freedom Planners in Richmond, Virginia. “It becomes more expensive as you grow older.”
According to 2012 data from the American Association for Long-Term Care Insurance, a couple taking out a policy at age 55 will pay an average of $2,466 a year, while a couple who waits until they’re 60 will pay $3,381. But some health conditions—a stroke or metastatic cancer, for example—can make you ineligible to purchase such a policy in the first place. So it can be wise to look into a policy now, while you’re in good health.
2. You’re likely not going to stay an empty nester
Got grand plans to build a wet bar in your basement? Not so fast. “Unless [your child] is a shark on Wall Street, he may need some help from his parents,” says Brian Mahany, CFP®, principal at Sustainable Financial Planning in Toledo, Ohio. “I am definitely seeing some parents converting their basements for their kids to live in.”
Pew Research data reveals that the percentage of 25- to 34-year-olds living in “multigenerational” households rose from 11% in 1980 to 21.6% in 2010. And only 48% of these so-called Boomerang kids pay rent to their parents. “A great many parents feel honor-bound to help their children,” says Mahany. “They’re not giving their kids any kind of lease.”
3. And you may still have to pay for your children’s health insurance
Recent grads are having a hard time in the job market: One study by the Federal Reserve Bank of New York estimates that 44% of recent grads are underemployed, meaning that they work in jobs that don’t require a college degree—which also likely means they aren’t getting the perks that a good job normally brings, like insurance.
On top of that, they are graduating with a lot of debt, which tends to leave little money left to cover their bills, let alone health care. “With the student debt load kids are carrying, I have seen more instances of parents bringing kids back into the family health plan,” says Mahany.
According to Healthcare.gov, children under 26 may be eligible for coverage under their parents’ health insurance plan even if they’re married, not living at home and attending school. Keeping your kids on your insurance may only amount to a few extra dollars a month for you, but it’s still an extra cost that you’ll have to budget for—on top of the fact that they’ve taken over the basement.
RELATED: Health Insurance 101