5 Financial Moves To Make in Midlife from Voya Financial

You have a lot of years and unexplored adventures ahead of you. Now is your time to imagine… a chance to redefine retirement, one that uniquely belongs to you. Many people are choosing to embrace a more fluid second half of their life—often popping in and out of the workforce on their terms. And that’s what it’s all about: living life on your terms.

But in order to enjoy the future you envision, you’ll need to fund it. Here are five financial moves to consider in your 50s.

1. How much money is enough to retire?

Good question. Start by getting specific about the lifestyle you want in your later years. How will you fill your days? Will you pick up a new gig? Being clear on the future you envision will help you know how much income you’ll need.

To help figure this out, you can try the myOrangeMoney® Retirement Calculator.1 This calculator can help you consider vital factors such as, your age, when to take social security, other sources of income, health care costs in retirement and other special considerations like caring for a loved one with special needs.*

If you’re still rounding out your working years, consider these steps to help you optimize your workplace retirement plan:

  • Maximize savings by taking full advantage of any employer match, contribution limits and catch-up contributions. If you’re age 50 or older, you’re eligible for an additional $7,500 in catch-up contributions, raising your employee contribution limit to $30,000 in 2023.
  • Allocate assets appropriately against your time horizon to minimize risk and maximize the growth potential of your investments.
  • Check to see what solutions your employer offers to help you create a future retirement income stream and payout strategy that considers all retirement income sources.

2. Imagine, not owing anyone – anything.

It’s generally a good idea to reduce and eliminate debt as you head toward retirement. In addition to saving for retirement, be sure to commit to a certain amount per month toward a prioritized list of debt you owe. Strategies to pay off debt include consolidating your debt to a lower interest loan or credit card, or paying off the highest interest debt first. Don’t forget to create a budget2 to help you keep yourself on track.* And be sure to build up your emergency savings so when life happens, you can avoid tapping your retirement funds or going into debt again.

3. Look into becoming healthy, wealthy and wise.

The reality is that healthcare expenses increase as we age. In fact, research shows that to have a 90% chance of meeting health care spending needs throughout retirement, a man will need $166,000, a woman will need $197,000 and a couple will need $318,000.3

One way to cover eligible current and future health care costs is with a Health Savings Account (HSA). HSAs are tax-advantaged accounts available for individuals covered under an HSA-compatible high-deductible health plan (HDHP). These accounts provide a way to contribute and save money to pay for current or future qualified medical expenses. In 2023, you can contribute up to $7,750 if you have health coverage for your family, up to $3,850 if you have coverage for only yourself, and an added $1,000 if you are age 55 and older. HSAs offer several advantages, including:

  • Triple tax benefits
    1. Tax-free contributions: Funds directed to an HSA reduce taxable income. Contributions are also not subject to federal payroll taxes, or FICA.
    2. Tax-free growth: Most HSAs offer investment options after your balance reaches a designated threshold. Similar to retirement accounts, capital gains and investment income are non-taxable, potentially allowing savings to grow more over time. As with any investment, there are risks; make sure to fully explore those risks before choosing to invest.
    3. Tax-free withdrawals: Qualified expenses are not taxed and are characterized as reimbursements, not income.
  • Portability with no expiration
    HSA owners can transfer accounts from one employer to another and unused balances roll over indefinitely, making HSAs a terrific way to contribute and save funds for later use.
  • No Required Minimum Distributions (RMDs)
    HSA owners control when they use funds from their accounts and there is no rule that requires distributions at a certain age.

4. Get serious about estate planning

It’s not just for the ultra-rich. Your estate is everything you own at death – and an estate plan can make sure all things will be divided up – as you wish – so you can leave your loved ones the legacy you intended. When planning your estate, in addition to deciding how to distribute your assets, you’ll need to consider the following:

  • Beneficiaries: Determine who you want your assets to go to. Be sure your beneficiary designations (governed by provider contract and not your will) on life insurance, retirement accounts and other investment contracts reflect your wishes and keep them up to date as things change in your life. If your beneficiaries happen to have a disability or special needs, there may be additional considerations.4
  • A will and executor: Choose an executor of your estate who will oversee your wishes as outlined in your will, pay applicable taxes and handle other aspects of your estate.
  • Living Will/Power of Attorney: Consider a living will, which documents your end of life wishes, and a healthcare proxy, which appoints someone else to make decisions about your medical care should you become incapacitated and unable to make such decisions yourself. Another document to consider is a durable power of attorney, which allows someone else to make financial decisions on your behalf.
  • Guardian/Trusts: Appoint a successor guardian if you have children under age 18. If you are a caregiver of a loved one with a disability,5 there may be additional considerations to help ensure you are providing care for their lifetime, including special needs trusts. If you have a trust in place, make sure there are successor trustees to carry out your wishes after you’re gone.

5. Provide a lifetime of care for a child with a disability or special needs

If you’re a parent of a child with a disability or special needs, you know that giving your child the care and support they deserve is a lifelong challenge. That’s why it makes sense to tackle long-term special needs planning now, so you can rest a bit easier knowing that you’ve taken steps to help ensure your child will always be looked after — even after you’re gone.

When considering special needs planning, it’s wise to consult with a financial professional experienced in working with families with special needs and disabilities.  Additionally, programs like Voya Cares®6 can provide advocacy, resources and solutions.7 Visit their site for useful information on topics like special needs trusts, government benefits, guardianship considerations and how to create an effective letter of intent.

Remember to set your goals, know where you stand financially and take action. After all, everyone saves the best for last… how will you reimagine your next chapter?

1 https://www.voya.com/tool/orange-money-retirement-calculator

2 https://www.voya.com/tool/budget-calculator

3 EBRI, Projected savings Medicare beneficiaries need for health expenses remained high in 2022, February 2023.

4 https://www.voya.com/article/key-considerations-special-needs-financial-planning

5 https://www.voya.com/article/estate-planning

6 https://www.voya.com/about-us/our-character/voya-cares-value-proposition

7 https://www.voya.com/page/voya-cares-individuals-and-caregivers

*IMPORTANT: The illustrations or other information generated by the calculators are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. This information does not serve, either directly or indirectly, as legal, financial or tax advice and you should always consult a qualified professional legal, financial and/or tax advisor when making decisions related to your individual tax situation.

Products and services are offered through the Voya® family of companies.

This material is provided by Voya for general and educational purposes only; it is not intended to provide legal, tax, or investment advice. All investments are subject to risk. Please consult an independent tax, legal, or financial professional for specific advice about your individual situation.

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