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8 Retirement Planning Moves to Make in Your Fifties
March 4, 2021
We always say that retirement planning should begin as soon as your career does, and for most of us that means in our early- to mid-twenties. But because getting started in life can be challenging, many people don’t really start to consider retirement until their thirties, forties, or even fifties.
Either way, your retirement planning should be kicking into high gear once you reach age 50. Here are eight things you definitely need to consider during this decade.
Increase your savings rate.
A good target goal for retirement savings is to stash 20 percent of your income from each paycheck. But if you can’t meet that goal, get as close as you can.
Take advantage of matching contributions.
Contribute at least the matching amount from your employer, if they offer matching contributions to retirement accounts.
Make catch-up contributions.
If you’re maxing out your contributions each year, remember that those over age 50 can make additional contributions to retirement accounts while enjoying the same tax advantages. This year, you can contribute an extra $6,500 to qualified retirement accounts like a 401(k), and an extra $1,000 to IRAs.
Consider whether paying off your mortgage is the best plan.
Many of us dream of living debt-free in retirement and living without a mortgage is the epitome of that dream. But with mortgage rates so low these days, contributing extra funds to a retirement account or other savings vehicle might actually be the better plan.
Pay off credit card debt.
If you’re doing to tackle debt, credit cards should be your prime target. You’ll waste a lot more money on these high-interest debts than you would a mortgage.
Consider a health savings account.
If you’re eligible for a health savings account, you can enjoy certain tax advantages while saving money for qualified healthcare expenses. Money that is not used each year rolls over to the next year, and even into retirement when you can use the money for Medicare premiums, medications, and more.
Consider long-term care insurance.
Long-term care in a nursing facility, or even nursing care at home, can quickly deplete retirement savings. With premiums lower when you establish a policy in your fifties, now is the time to consider whether you need such a plan.
Meet with us to discuss these issues, and more.
We can calculate your expected retirement income, compare with your retirement budget, help you set a target date for retirement, and make other important decisions that will affect your life in the future.
As a business owner, safeguarding your enterprise against unforeseen events is crucial for long-term success. Life insurance offers several strategies to protect your business, ensure continuity, and provide financial stability during challenging times. Two primary methods are buy-sell agreements and key person insurance. Buy-Sell Agreements A buy-sell agreement is a legally binding contract that outlines the procedure for transferring ownership if an owner departs due to death, disability, or retirement. Funding this agreement with life insurance ensures a smooth transition and financial security for the remaining owners and the departing owner's beneficiaries. Types of Buy-Sell Agreements Cross-Purchase Agreement: Each owner purchases a life insurance policy on the other owners. Upon an owner's death, the surviving owners use the policy proceeds to buy the deceased owner's share. This method is often suitable for businesses with a few owners. Entity Purchase Agreement: The business itself owns life insurance policies on each owner. If an owner passes away, the business uses the proceeds to buy back the deceased owner's share, redistributing it among the remaining owners. This approach is typically preferred for businesses with multiple owners. Key Person Insurance Key person insurance is a policy that a business takes out on essential employees whose loss could significantly impact operations. The business owns the policy, pays the premiums, and is the beneficiary. If a key person dies or becomes disabled, the policy proceeds can be used to: Cover the costs of finding and training a replacement. Offset lost revenue resulting from the key person's absence. Reassure clients, creditors, and investors of the business's stability. This strategy is vital for businesses where certain individuals are integral to success, such as top executives, lead developers, or primary sales personnel. Additional Strategies Beyond buy-sell agreements and key person insurance, consider these life insurance strategies: Collateral Assignment: Use a life insurance policy as collateral for business loans. In the event of the owner's death, the lender is paid from the policy proceeds, preventing financial strain on the business. Executive Bonus Plans: Provide key employees with life insurance policies as part of their compensation package. This not only offers them personal financial protection but also serves as an incentive for retention. Deferred Compensation Plans: Promise to pay key employees a certain amount at retirement, funded through life insurance policies. This ensures the business can meet its obligations without affecting cash flow. Implementing life insurance strategies is essential for business owners aiming to protect their enterprises from unforeseen events. Work with us to explore your life insurance options and we can help your business remain resilient and continue to thrive.
Term life insurance provides coverage for a specified period, such as 10, 20, or 30 years. If you outlive your term policy, the coverage ends, and no death benefit is paid to your beneficiaries. As you approach the end of your term, it's essential to evaluate your current financial situation and consider options to maintain life insurance coverage if needed. Options to Consider Annual Renewable Term: Some term policies offer an option to renew annually after the initial term expires. While this allows you to extend coverage without a medical exam, premiums typically increase each year based on your age, making it a potentially costly option over time. PROGRESSIVE.COM Policy Conversion: Term-to-Permanent Conversion: Many term policies include a conversion feature, allowing you to convert your term policy into a permanent life insurance policy, such as whole or universal life, without undergoing a medical examination. This option can provide lifelong coverage and build cash value, but premiums will be higher than those of the original term policy. NEWYORKLIFE.COM Purchasing a New Policy New Term Policy: Applying for a new term life insurance policy can be an option, especially if you're still in good health. However, premiums will be higher due to increased age, and you may need to undergo a medical exam. Permanent Life Insurance: Alternatively, you might consider purchasing a permanent life insurance policy, which provides lifelong coverage and accumulates cash value. This option is generally more expensive but offers additional benefits. Exploring Alternative Coverage: Final Expense Insurance: Designed to cover end-of-life expenses, such as funeral costs and medical bills, final expense insurance offers a smaller death benefit with more affordable premiums and may not require a medical exam. Guaranteed Universal Life Insurance: This type of policy provides coverage for a specified age (e.g., up to age 90 or 100) with lower premiums compared to whole life insurance, focusing primarily on the death benefit without significant cash value accumulation. Take Action Now As your term life insurance policy nears its expiration, assess your current financial needs and health status to determine the most suitable course of action. Consulting with an insurance professional can help you navigate your options and select the best solution to ensure continued financial protection for your loved ones.
