Attaining the age of 50 means you are entering the best half of your life! It’s the age of decluttering bad debts and saving more for your golden years! Besides, hitting the fabulous 50 might give you mixed feelings. You might be thinking that you are getting old and the disastrous menopause gonna hit you within a short time.
On the other hand, you might be feeling happy that your daily 9 to 5 grind is going to end! And I hope, you have been doing well in building your retirement nest egg. But at the same time, it’s equally important to look after your finances even after you hit the age of 50! So, we have listed some ways so that you can have a glance and take care of your financial health!
Money Management In Your Senior Years
1. Maintain your emergency fund
Hopefully, you have been saving for your rainy-day fund. During any financial emergency, you can pull out money from that fund. As a result, it gives you peace of mind. After hitting 50, you might think that having a substantial amount in your emergency fund is not required. And you pull out money to invest somewhere else and all. But let me tell you, life is uncertain and you can’t predict your future.
So, you need to be prepared always. And having a handsome nest egg for your rainy-day fund is always important. So, take care of your rainy-day fund like the way you have been doing. It will help you during any financial exigency and avoid taking out loans!
2. Use your credit cards wisely
Most likely, you are using your credit cards for those awesome reward points and cashback offers. But you should be cautious while swiping your card for paying bills. Because plastic money doesn’t let you feel how much you are spending actually! But at the end of the billing cycle, you get shocked to see a whopping outstanding balance amount and the debt mess you are in!
Once you fall prey to the debt trap, it becomes quite tough to get out of that! In that case, you can follow some tips to pay off credit card debt faster or look for some debt relief options. So, always remember to pay off your credit card bills on time! Else, you may end up getting debt trapped!
3. Refrain from lifestyle inflation
Being in your 50s means you are most likely established! Most probably, you are making a handsome amount of money. You can afford your wants now, apart from fulfilling your basic needs! And this is a high time when you get vulnerable to lifestyle inflation. But what exactly is lifestyle inflation?
Well, it can be defined as a person’s increase in spending when his/her income goes up! So, what can you do to stay away from lifestyle inflation? You can increase your spending on certain things and can enjoy occasional family trips. But make sure that you aren’t overwhelmed by the rising costs. Because when your lifestyle inflates, your net gain becomes zero. And of course, it’s not a healthy sign of your finances in your 50s!
4. Make the most of your retirement plans
If your employer is offering a 401k, you should readily accept that! I hope that you have been contributing enough, keeping your employer match in view. But it’s high time to contribute more than your employer match. It will help you to save a substantial amount for your retirement nest egg!
Apart from 401k, you can opt for other retirement plans like a traditional IRA or a Roth IRA. In 2019, you can contribute a maximum upto $6,000 annually, up from $5,500 last year. Well, what if you get a chance to stash a bit more money in your retirement accounts? Yes, IRS (Internal Revenue Service) offers a catch-up contribution for retirement savers who are 50 or over! In 2019, you can put an additional $6000 in your 401k retirement account. Whereas, in your IRAs, you can put in an additional of $1000.
5. Refinance your home
Has the mortgage rate dropped recently? If yes, you can opt for refinancing your home! But avoid refinancing to another 20-year loan. Otherwise, you will be paying off your loan in your 70s! Rather refinance for a term which you already have on your original mortgage loan. This will help you to save a substantial amount on the interest payments.
6. Stay away from cash-out refinance
You must have built up equity in your home with time! When you are refinancing your home, most likely you have got a lower rate with more suitable terms and conditions. As a result, you might get tempted to cash-out the difference amount! Usually, the cash-out amount is limited to 80% to 90% of your home equity. You can spend this amount on home improvements, debt consolidation, or other financial needs. But why is it bad? You are keeping your home at risk as it’s the collateral for your loan! So, think wisely before you cash-out during refinancing home in your 50s.
7. Create an estate plan and will
A set of documents can help you and your family even after your incapacitation or demise. The first thing you need is a will. You can name an executor(s) who will get your money and possessions. Besides, you can name a guardian(s) for your minor children, who will take care of them in your absence. However, if you already have a will, review it once to make sure that it still reflects your wishes. Whereas, an estate plan goes further than writing a will. In other words, you can say that a will is a part of an estate plan. You can mention how your assets will be preserved, managed and distributed after your demise or incapacitation. The planning includes your bequest of assets to your heirs and the settlement of estate taxes. As a result, it may help you and your heirs pay less in taxes, fees, and court costs. So, make sure to consult an expert attorney who has experience in estate law!
8. Keep tabs on your health
As you reach 50, you need to compensate for hormonal, cardiovascular and muscle changes. Weight gain is common in aging women because of the decrease in muscle mass, accumulation of excess fat and a lower resting metabolic rate. Whereas, hormonal shifts can cause a range of symptoms and increase your risk of heart disease and stroke. That’s why your diet should be a bit different from your earlier diet. Consume heart-healthy foods and engage in some physical activities. This way you can reap the benefits of investing in your health for having a better future. The healthier you are, the more money you can save. And hopefully, you will be able to enjoy your life to the fullest!
9. Renew your term life insurance policy
Did you buy term life insurance policy during your 20s or 30s? Then it’s on the verge of getting expired! Well, it’s normal to get worried about your dependents, be it your spouse or your children! So, you can renew your policy before it gets expired. In fact, you can get the renewal at favourable rates without lapsing your insurance policy.
10. Opt for Long-Term Care (LTC) insurance
According to the U.S. Department of Health and Human Services, today’s average 65-year-old has a 70% chance of needing some kind of long-term care as they age. But what if you don’t have a substantial nest egg to cover such long-term care! It is advisable to buy a long-term care policy! It will help you to make your stays in care facilities much affordable. Besides, you won’t have to withdraw from your retirement funds now and then!
LTC insurance will provide you with income in the following cases:
- You are dependent on someone else’s care.
- You need assistance for basic needs due to an illness.
You need to fill out an application form and answer some health-related questions to buy LTC insurance. You may have to show your medical records and appear for an interview over the phone or face to face. You choose the amount of coverage you want. The policies usually cap the amount paid out per day and the amount paid during your lifetime! The income benefit you will receive can be used for your long-term care. Also, it assures that you or your family will get assistance for your care when you can’t do at least 2 out of 6 “activities of daily living,” called ADLs.
So, don’t wait! Learn to redefine your midlife, so that it can pave the way for a beautiful retirement life ahead!
About the author:
Valentina Wilson is a personal financial blogger who loves to write on how to manage personal finances in a better way. Traveling is also her passion and she loves to explore different places alone. You can find her at her blog Best Debt Consolidation.