7 Financial Moves to Make in Your 50s

The right financial moves can mean the difference between having a comfortable retirement or one marred with worry and stress. Reaching your 50s is a crucial point in your retirement planning. In this article, we will review 7 financial moves to make in your 50s.

1. Find Out Where You Stand

You must know your net worth to determine if you are ready for retirement. It is said you should save 6-8 times your current annual income. Besides savings, you should also investigate how much social security income you can expect. You can do this by visiting ssa.gov/myaccount. There you can get estimates of how much your benefit would be depending on what year you start receiving it.

2. Save Seriously

There are many bumps along the road that can side track even the best laid plans. Things like divorce, unemployment, and medical issues. But once you are over 50 you can save more in your IRA and 401k. For your 401k you can save and additional $7,500 annually. For your IRA you can save an extra $1,000. Be sure to take advantage of these higher amounts so they can work to your advantage.

3. Contribute to an HSA

Contributing to an HSA comes with three advantages. First, contributions are pretax. Second, earnings grow tax free. Third, withdrawals are tax free when used to eligible medical expenses. To be able to contribute to an HSA you much have a deductible of at least $1,650 for an individual and $3,300 for a family. You are limited each year on how much you can save. It is $4,300 for an individual and $8,550 for a family. You can save these funds and allow them to grow tax free. Then use them during retirement for medical expenses.

4. Plan for Taxes

Even if you have saved a good amount of money in retirement accounts, you have to remember that withdrawals will be taxed as ordinary income. Because of this, you may want to consider investing some funds into a Roth IRA. These contributions are not tax deductible, but withdrawals are tax free as long as you’re at least 59 ½ and have had the account for at least five years.

5. Pay Down Debt

High interest debts, such as credit cards, can wreak havoc on your retirement income. If you have a 26% rate on credit card debt and you are only earning 7% on your investments, you are 19% worse off.

6. Plan for Long Term Care

Even if you are currently in excellent health, you should plan for long term care. This is because 70% of adults aged 65 or older will require some form of long term care. 1 in 5 of these will require long term care for more than 5 years. Long term care is expensive, and even just paying for a few months could obliterate your savings. Consider long term care insurance. Purchasing a policy in your 50s will result in a lower premium than if you wait until you are older.

7. Get Your Estate Planning Documents in Order

You need to have documents in place to name individuals to take care of you if you become disabled or unable to communicated. This would include both financial and health care powers of attorney. A trust and will are also important to plan for what will happen to your assets when you pass.

Executing Financial Moves to Make in Your 50s

Now that you have learned these 7 financial moves to make in your 50s, it is time to execute them. You can also enlist the help of a financial planner to better set you up for a successful retirement.

Questions? Want to schedule an appointment? Contact us by clicking here.