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That's Younity.
That's Younity.
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Smart Financial Goals to Achieve in Your 40s and 50s

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Congratulations! You’ve reached a stage in your life where your financial goals are more likely than not starting to shift. Up until this point, you’ve been working towards building your life and establishing a comfortable savings plan. Now comes the time to protect it for the future. Below we discuss the smart financial goals to reach in your 40s and 50s to help secure your path towards a comfortable retirement.

Debt Elimination & Downsizing Goals

By the time you’ve reached your 40s and 50s, it’s likely you’ve accumulated a variety of debts—high-interest ones like credit cards and personal loans, and lower-interest debts like auto loans and mortgages. Now is the time to create a plan to pay down these obligations so you can enter retirement with as little debt as possible.

The first goal to tackle is eliminating high-interest debts. Credit cards and other high-interest obligations can become expensive over time, so paying them down first will help free up funds that can be used for other debts or savings. If you’re still paying on a mortgage, consider making additional payments to ensure your mortgage is paid off before you retire. As this is likely your biggest and most important bill, having a goal to eliminate this debt altogether before retirement can provide you with a great sense of financial security.

Another way to eliminate or minimize debt is to evaluate your current lifestyle. Do you still need all the vehicles, or would a smaller house fit your lifestyle better? Downsizing when appropriate can reduce expenses and create additional funds for retirement.

Retirement Planning

During your 20s and 30s you may have been contributing to retirement accounts, but it wasn’t at the forefront of your mind. Other expenses took center stage and retirement contributions were put on the back burner. During your 40s and 50s, there is an opportunity to maximize your retirement savings via catch-up contributions, and if you’re eligible, make HSA contributions.

Catch-up Contributions

Once you reach age 50, as long as you’re still working you are able to make additional contributions to your retirement accounts, known as catch-up contributions. This allows you to maximize your retirement savings during the remainder of your working years.

HSA Contributions

HSA funds are owned by you, and not your employer. As long as you are enrolled in a high-deductible health plan (HDHP) you can contribute to an HSA account. If you leave the job, or are no longer enrolled in a HDHP, the account still remains available for you to use for qualified medical expenses without tax implications, even into retirement years. 

If you are able to max out your HSA contributions year after year, and can avoid using the funds while working, you can reserve the funds for use for qualified medical expenses in retirement. To ensure your HSA funds are working for you now and through retirement, Diamond offers Health Savings Accounts and Health Savings Share Certificates of Deposit.

Higher Emergency Fund Goals

In the past you’ve been told to make sure you have an established emergency fund that can pay for a minimum of 3-6 months worth of expenses should the need arise. That still remains true in your 40s and 50s, but because you’re getting closer to retirement, having an emergency fund that can cover up to a year of expenses is a recommended goal. Like your retirement accounts, you’ll only want to start increasing this savings once you’ve eliminated, or paid down a significant amount of your high-interest debts.

Estate Planning

You’ve spent years working hard to build the life you have today, so make it a goal to protect it. Setting up an estate plan ensures your hard work isn’t left to chance and dictates how your assets and wishes are carried forward.

To protect your financial assets, ensure you have beneficiary designations in place. A beneficiary designation is an instruction attached to bank accounts, retirement accounts, and insurance policies stating exactly who receives your assets after death. The funds are directly passed to your beneficiaries bypassing the probate process. 

Schedule a meeting with an estate planning attorney to create or review your Power of Attorney (POA) and Last Will and Testament. A POA allows someone you trust to manage your financial affairs if you become unable to do so. Once completed, provide the necessary documentation to your financial institutions, investment firms, and insurance companies so there are no necessary delays when help is needed. Your Last Will and Testament ensures your assets are distributed according to your wishes, and names an executor to carry out your instructions. Taking these steps now can help protect your assets, avoid unnecessary complications, and give you and your loved ones peace of mind.

If you need assistance with budgeting or getting started on these financial goals, we are here to help. We have HERO financial counselors who are certified in budgeting and money management. Schedule an appointment to get started. 

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