Mastering Your Finances at 50: 6 New Year’s Resolutions for Success
Written by
Sean Bryant
Edited by
Ashleigh Ray
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The new year is around the corner, and people everywhere are starting to make financial new year’s resolutions. For people in their 50s, the start of the year is a great time to focus on financial well-being.
Maybe you plan to retire in a few years, or maybe you don’t plan to retire for another decade or longer. Maybe you’ve only recently started saving for retirement. Regardless of your situation, having a handle on your current and future finances is essential.
“Developing a clear financial plan should be one of your top priorities,” said Steven Kibbel, financial planner and founder of DayTradingz.com. “As many can attest from experience, having a roadmap is so important — failing to plan is planning to fail.”
To help you master your finances in your 50s, here are 6 resolutions to focus on.
Beef Up Your Emergency Fund
It doesn’t matter if you’re fresh out of college or in your 50s, having an emergency fund is crucial. Unexpected expenses are likely to happen at any point, and having the cash available to pay for them will prevent you from using credit cards, loans or your retirement savings.
If you don’t currently have an emergency fund, start by opening a new account and save three to six months’ worth of living expenses. But, if possible, set a goal for up to 12 months’ worth of expenses if you’re in your 50s since you want have time to rebuild it in case something pops up.
Pay Down Debt
Once you retire, you will be on a fixed income. Ideally, you won’t have regular debt payments to make. Unfortunately, not everyone can achieve this, but it is a good goal to work toward.
If you can, now is the time to pay off any loans or debt, like car loans, mortgages, personal loans or credit card debt. Not having to worry about making these payments during retirement can be a significant weight off your shoulders.
Assess Your Retirement Savings
Evaluate your current retirement accounts, including 401(k)s and IRAs. Check the current balance in each account to see if you are on track to meet your retirement goals. If not, consider increasing your contributions to your retirement savings.
Take Advantage of Retirement Catch-up Contributions
As soon as you turn 50, you can start making catch-up contributions to your retirement accounts. Normally, there is a maximum amount you can contribute each year. However, catch-up contributions allow you to invest even more since you’re getting closer to retirement.
The catch-up contribution limit for an IRA in 2024 is $8,000, which includes the normal contribution limit of $7,000 plus an additional $1,000 of catch-up contribution. The catch-up contribution limit for a 401(k) in 2024 is $30,500, which includes the normal contribution limit of $23,000 plus an additional $7,500 of catch-up contribution.
The IRS also allows catch-up contributions for people who participated in Thrift Savings Plans, 403(b) and SIMPLE IRA plans. In 2024, the catch-up contribution amount for the 403(b) and Thrift Savings Plans is $7,500, and $3,500 for the SIMPLE IRA plan.
According to the CEO of Coach Foundation, Sai Blackbyrn, “As you approach retirement age, it’s crucial to maximize your contributions to retirement accounts. Take advantage of catch-up contributions allowed by many retirement plans for individuals aged 50 and older.”
Blackbyrn continued, “This includes contributions to 401(k)s, IRAs or other employer-sponsored retirement plans. Increasing your contributions in your 50s can significantly boost your retirement savings and help ensure a more comfortable lifestyle in your later years.”
Begin Planning for Medical Expenses
Your medical expenses are likely to increase as you get older. This will vary based on your medical needs, but starting to plan for these expenses in the coming years is helpful.
Once you’re 65, you’ll be eligible for Medicare. However, there are also certain services that you may need that Medicare won’t cover. This includes long-term care, routine physical exams, eye exams, dental care, dentures, hearing aids (including the exams for fitting them), cosmetic surgery, massage therapy and concierge care.
You must also plan for medical costs between the ages 50 and 65. If you are under your employer’s medical insurance but plan to retire before age 65, you must find alternative insurance coverage. This could include purchasing healthcare from the Health Insurance Marketplace, coverage from a spouse, a health share plan, private health insurance, Medicaid or COBRA.
Create a Will
If you haven’t already created a will by turning 50, now is the time. Having a will ensures that your family knows your final wishes and your assets will be distributed as you want. Although no one likes to think about dying, it is essential to have a will so that you have a say in how your assets are handled.
Choose money resolutions that make the most sense for your goals, circumstances and finances. Mastering money in your 50s means taking a proactive approach to your finances, and a new year is the perfect time to start.
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