As you approach retirement age, the importance of planning for your finances and future becomes increasingly apparent. Being organized helps you make informed decisions that benefit your long-term financial health, like choosing investments to help you build up a nest egg for retirement or setting up a life insurance policy. Additionally, being organized and prepared financially can give you peace of mind knowing that you have a plan to provide for yourself during retirement.
Here are three tips to consider when organizing your finances.
Pay down debt
If you haven’t already, now is the time to aggressively push toward eliminating all forms of debt. Consider consolidating high-interest credit cards and loans into one payment with a lower interest rate or using extra funds from any tax return or income bonuses towards paying off debt quickly. Doing so can help reduce financial stress and free up more money for retirement savings or other investments.
Start by creating a budget, which will help you to see where your money is going and where you can allocate funds for debt repayment. Try to pay more than the minimum payments on any outstanding debts, as this will reduce the overall cost of the loan and help pay it off sooner. You could also look into debt relief programs from credit card companies and government organizations.
Boost retirement savings
Now is the time to seriously consider retirement savings if you haven’t already. Take advantage of employer-sponsored plans like 401(k)s and consider increasing the amount you set aside each month. Contributing the maximum amount annually can help you accumulate a sizable nest egg by retirement. Take advantage of catch-up contributions, which allow you to contribute more than the annual limit. You should also look into other retirement accounts like IRAs to diversify your retirement savings portfolio.
Additionally, look for ways to save on taxes, like claiming deductions for contributions made to an IRA or taking advantage of any employer matching contributions. You can also consider investing in stocks and bonds or other investments that have a higher return potential than traditional savings accounts.
Consider life insurance
If you have dependents or a partner that relies on your income, getting a life insurance policy in place is important. Life insurance provides peace of mind for you and your family if something unexpected happens, and the money from the policy can go towards helping pay off debt or covering expenses after you pass away. It’s important to know how much life insurance coverage is right for you and whether or not you will have to pay taxes on your life insurance policy.
Do you pay taxes on life insurance? Yes, you do typically need to pay taxes on life insurance. Generally, if the death benefit exceeds the premiums paid into the policy, it is taxed as income. If the beneficiary of a life insurance policy receives more money than what was paid in over the term of the policy, then they will likely be subject to paying taxes on some or all of it. Taxes vary from state to state and should always be checked with a qualified accountant or tax advisor for advice.
Bottom line
Organizing your finances in your 50s is crucial to ensure a stable financial future. Having a well-managed financial plan in place will help give you the confidence and assurance that your money is working hard for you and will be there when it comes time to retire.
Content within this article is provided for general informational purposes and is not provided as tax, legal, health, or financial advice for any person or for any specific situation. Employers, employees, and other individuals should contact their own advisers about their situations. For complete details, including availability and costs of Aflac insurance, please contact your local Aflac agent.
JUVENILE LIFE 65000 & B61000 SERIES – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC18B61JWO & ICC18B61JTO. In Virginia, Policies ICC0965JTO & ICC0965JWO. Not available in DE or NY.
LIFE A68000 SERIES – WHOLE & TERM LIFE – In Arkansas, Idaho, Oklahoma, Oregon, Pennsylvania, Texas, & Virginia, Policies: ICC1368100, ICC1368200, ICC1368300, ICC1368400. In Delaware, Policies A68100-A68400. In New York, Policies NY68100-NY68400.
Coverage may not be available in all states. Benefits/premium rates may vary based on state and plan levels. Optional riders may be available at an additional cost. Policies and riders may also contain a waiting period. Refer to the exact policy and rider forms for benefit details, definitions, limitations and exclusions. For complete details, including availability and costs, please contact your local Aflac agent.
Aflac insurance coverage is underwritten by Aflac. In New York, coverage underwritten by Aflac New York.
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