Expensive Penny, I’m 55 years outdated and haven’t any financial savings or life insurance coverage. What are my choices?

Dear Penny,

I am 55 years old and work full time when work is available at a government agency.

I have been working since I was 18, but I do not have a pension. I don't know what to do at this age or what mutual fund or financial institution to trust with minimal risk.

I also have no serious illnesses and need affordable life insurance. I prefer not to take out risk insurance as I will probably survive the conditions. Do you have any ideas for me


Dear T.,

At 55, you are young enough to live another 25 to 30 years – and possibly even longer. Since it sounds like you're in good health, you need to prepare for a long retirement and don't have much time to save.

At 55, you are old enough to insure your life dearly.

Statistically speaking, you are more likely to die than a 20-year-old. When you're in your fifties, you pay three to six times more for life insurance than people in your twenties.

With life insurance – the most common alternative to risk life insurance – the premium costs can significantly affect your ability to save. A healthy 55 year old can expect annual premiums of $ 6,000 or more for a policy over $ 250,000.

The difficult thing about financial planning is that we really don't know whether we will be 100 years old or be struck by lightning tomorrow. In a perfect world, you are prepared for both extremes and everything in between.

But in the real world, we have limited resources. I assume that you have not yet saved up for retirement because you only have a limited amount of cash.

Although building a nest egg and taking out long-term life insurance are separate goals, I suggest that they are mutually exclusive. As in, you may have to choose one or the other.

If you still have dependents, you should rethink your life insurance and take out a policy that covers your basic needs until you are able to be independent. For example, if you have a 12-year-old child, you can take out a 10-year policy to help them grow up in the event of death.

In addition, saving for your own future is a top priority, unless you have mitigating circumstances – for example, a child with a disability who needs lifelong support and care.

Unfortunately I have no personal financial magic tricks for building a healthy pension fund at the age of 55. You have to use all the resources to save money and plan to work as long as possible.

Since you say you work full time when work is available, you may not have access to an employer sponsored retirement plan such as 401 (k) or 403 (b). This is probably in the obvious file, but I'll throw it out anyway: if you can use your 37 years of work experience to help you find a more stable job with pensions, do it.

Regardless, open an individual retirement savings account (IRA). It's pretty easy to use one of the many online finance companies that use robo-advisors. This means that a computer selects your investments for you. Typically, you will be asked to estimate how many years you will have to retire and to answer a number of questions to assess your risk tolerance.

From there you will receive recommendations for the allocation of your portfolio. While I can't tell you how to invest your money, I can tell you this: it can be intimidating to trust a computer's recommendations, but in the past computers can invest better than people.

Since you are over 50 years old, you can deposit up to $ 7,000 into your IRA in 2019. The limit for people under 50 is $ 6,000. Try to put every available dollar into your IRA with the aim of maximizing your contribution every year.

Yes, that's a lot of money to get away with, but there are plenty of ways to make money beyond your full-time job. Consider possible ways to earn extra income, such as driving for a pick-up service, taking care of pets, or renting a spare room with Airbnb – all to bring extra money.

If you can fully fund your IRA, try paying off any debt for which you have the next highest priority. Retirement becomes much less stressful without a mortgage or car payment.

Just know that the greatest gift you can give to your loved ones is to prepare for your future so that you do not need as many resources when you retire. So use what you need to do to fund what I hope is a long and healthy life.

Robin Hartill is the editor-in-chief of The Penny Hoarder and the voice behind Dear Penny. Submit your retirement questions to [email protected]

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