Five Financial Things to Do Before 50
Get a head start on smart financial choices now so you can feel confident about your future. Not sure where to begin? Start with these five financial goals to tackle before you turn 50.
Whether you’re approaching 50 or are several years from there, financial planning and
wealth management require a long-term approach. Let’s consider how you can get on the path to lower debt and increase retirement savings by hitting these five important milestones.
1. Pay off Your Debts
If you have debts, make a concrete plan to pay them off. Start by creating a list of all your debts, including the interest rates on each one and your minimum monthly payments.
Keep in mind that mortgage interest is tax deductible when the loan is used to buy a home, and interest costs on student loans are tax-deductible for up to $2,500 per year.
Many people focus on paying off whichever loan has the highest interest rate, which usually means their credit cards. Not only do credit cards typically have higher interest than other types of loans, the interest charges aren’t tax-deductible.
If you have several loans to pay off, you might use a home equity line of credit (HELOC) or a home equity loan to consolidate your debts. Each of them uses your home as collateral to secure a loan. A HELOC is like a loan that you could tap into when needed. A home equity loan is like a second mortgage.
Either one might give you a lower interest rate on your debts, especially if you use them to pay off credit cards, which could lower your monthly debt payments.
If you still have a mortgage and your home has substantially increased in value since you bought it, refinancing could be another way to pay off your other debts.
You could borrow more than your original mortgage and use the cash to pay off your credit cards, car loans, etc. Not only could this reduce your borrowing costs, but the interest from your mortgage would be tax-deductible.
Whether this is the right option for you could depend on the interest rate of your current mortgage and what the interest rate on your new mortgage would be. You should also consider the closing costs of securing a new loan to see if the math works in your favor.
Whatever approach you use for getting out of debt, take a close look at your budget and make a plan to pay off your debts as fast as possible. Not only would this save you money in the long run, but it can also help set you up for success when planning for retirement.
2. Review Your Savings and Emergency Fund
Many financial advisors would tell you that it’s important to have
an emergency fund that would cover at least 3 to 6 months’ worth of living expenses.
Many people, even if they have something set aside in a
savings account, might not think about how their situation has changed over the years and
whether they have enough to get through a financial emergency.
It’s important to have a
long-term savings plan by the time you’re 50 and, if possible, well before it so you have enough set aside to get through any economic storms while setting yourself up for a successful retirement.
Take a close look at all your monthly expenses, including rent/mortgage, debt payments, utilities, food, insurance, etc. Make sure that your emergency fund would be able to cover all of your living expenses.
Automate Your Savings
If you need to save more to build an emergency fund or for a major purchase, you could automate your savings by having a fixed dollar amount or a percentage of each paycheck transferred into a savings account that you designate as your emergency fund.
Many people discover that using their savings account as an emergency fund and a checking account for their daily and monthly expenses helps them stay on target with their savings goals. With automatic deposits into your savings account and the ability to leave the money there, you could be less likely to exceed your budget and more likely to save.
Maximize Your Savings
While many of our customers have
regular savings accounts, that’s not your only option if you’re setting money aside for a rainy day. You might consider
certificates of deposit (CDs), money market accounts, or individual retirement accounts (IRAs).
Use CDs and CD Ladders
A certificate of deposit (CD) is like a type of savings account where you deposit funds that will be off-limits to you for a specific amount of time, and, generally, you’ll earn more interest than you would with a regular savings account.
We offer
certificates of deposit with variable rates and terms, with maturity options ranging from 3 months to 5 years, and insurance that exceeds FDIC limits with our Certificate of Deposit Registry Service (CDARS®).
If you’re unsure about locking your savings away for too long, you might consider the
benefits of a CD ladder.
With a CD ladder, you could maximize the interest payments you receive on your savings while giving yourself access to these funds at different times.
You could put some of your savings into monthly and yearly CDs with different term lengths. The longer-term CDs would offer higher interest payments, and you can stagger them so your CDs would come to term at different times throughout the year and beyond.
Whenever one of your CDs comes to term, you could withdraw those funds without penalty or reroll them into a CD at whatever term works for you.
Consider a Money Market Account
Money market accounts are a type of savings account with tiered interest rates, which means the more money you have in your account, the higher the interest payments you’ll receive on these funds.
The great thing about money market accounts is you can still maintain access to your funds. There are minimum balance requirements, but we offer
three types of money market accounts, so you’re likely to find one that works for you.
3. Plan for Retirement
Financial experts recommend that by age 50, you should have six times your annual salary
saved for retirement. While that’s a ballpark figure, it’s important to plan conservatively and anticipate that your retirement costs could be higher than expected. That’s why getting ready for retirement now is so important.
Maximize your 401(k)
If your employer offers a 401(k) plan, consider maximizing your contributions. If your employer offers to match your 401(k) contributions, it’s a good idea to contribute the amount necessary to maximize the contribution.
For example, if your employer matches your contributions up to 4% of your salary, you would be leaving free money on the table if you didn’t contribute at least that much.
For 2025, the
maximum annual 401(k) contribution limit is $23,500 for individual contributions and $70,000 for employee and employer contributions combined.
Those who are age 50 and older can contribute an additional $7,500 in an annual “catch-up” contribution, raising their personal contribution limit to $30,500.
Making the most of your 401(k) savings now lets you benefit from compound interest gains by the time you retire.
Consider an Individual Retirement Account (IRA)
An
individual retirement account (IRA) is another way of saving for retirement. IRA annual contribution limits are the same as 401(k) plans. Beyond that, you have two types of IRAs to choose from: a traditional IRA and a Roth IRA.
What’s a Traditional IRA?
With a traditional IRA, all your contributions are made with pre-tax dollars (money you haven’t paid income taxes on).
Not only can these plans be a good way to save for retirement, but they reduce your taxable income just like a 401(k) does. You’ll have to pay state and federal income taxes on your IRA funds when you withdraw them in retirement.
Traditional IRAs reduce your taxable income, so this could lower your income enough that you could qualify for other benefits.
There are restrictions on deductibility and contributions based on 401(k) participation or income levels for single and joint individuals for income taxes.
What’s a Roth IRA?
Roth IRA contributions are often set up through your bank with money you’ve already paid income taxes on. Because your contributions are made on a after-tax basis, grows and distributes tax-free based on certain IRS requirements.
There are income restrictions on Roth IRAs based on a taxpayer’s modified adjusted gross income (MAGI), which is your total gross income minus eligible deductions.
For 2025, an individual with a MAGI of less than $150,000 can contribute up to the maximum contribution limit. Those with incomes between $150,000 and $165,000 can contribute a reduced amount, while those above $165,000 are barred from making Roth IRA contributions.
For married couples filing jointly, those with a MAGI of less than $236,000 can contribute up to the maximum amount. Those with incomes between $236,000 and $246,000 can contribute a reduced amount, while those with incomes beyond $246,000 are barred from making Roth IRA contributions.
4. Get Long-Term Care Insurance
If you haven’t purchased a long-term care insurance policy by age 50, consider getting one or at least start looking around to consider your options. If you wait too long to buy a policy, the premiums could become unaffordable.
Long-term care insurance may cover the cost of assistance with daily activities, hospice care, adult day care, nursing homes, and assisted living facilities.
Remember, there could be a gap between what Medicare covers and your cost of care, which is why many people rely on long-term care insurance during retirement.
Even if you already have health insurance and Medicare supplemental insurance, these typically don’t cover the cost of long-term care.
When shopping for a long-term care policy, make sure you’ll be able to keep up with the premiums in retirement. You wouldn’t want to start paying for coverage now and have to let the policy lapse before you need it.
Take a close look at any pre-existing conditions you may have before you apply for coverage. An insurance company might not cover some pre-existing conditions, or it could limit your coverage of that condition for some time, such as six months after your policy goes into effect.
Some long-term care policies double as life insurance coverage, so any care benefits you don’t use would be treated like a life insurance policy.
If you're a resident of Wisconsin or Illinois, for more information on long-term health insurance, visit the
Wisconsin Department of Health Services or the
Illinois Department on Aging.
5. Draft a Will or Trust
No one likes to think about the inevitable, but it’s best to plan for it. If you pass away without a will, your state’s legal system will decide how your assets are distributed. That’s why
estate planning is so important.
The court would typically favor your closest surviving family members, such as a surviving spouse, then your children, your extended family, and other descendants. If you have no surviving family members, your property would belong to the state.
Your estate means more than just any real estate you own. You could also include retirement accounts, life insurance policies, investments, bank accounts, valuable items, etc.
Wills Versus Trusts
A will is a legal document that gives instructions for how your property will be distributed after your death. It designates an executor who, along with court oversight, will be in charge of distributing the estate’s assets, according to the will, and paying any taxes and unpaid debts.
Wills can be important when someone’s survivors include minor children. A will could address their financial needs and appoint legal guardians.
A trust is a legal entity that allows you (the grantor) to transfer your assets to a trustee who manages and distributes your assets according to your wishes and for the benefit of your designated beneficiaries.
Wills become effective only after someone’s death. Trusts can be set up to go into effect while the grantor is still alive or after they pass away.
The execution of a will is a public process, and anyone can have access to the details. Trusts usually don’t become part of the public record.
We’re Always Here to Help You Plan
It’s never too soon to start saving for retirement. If you need to
open a retirement account or
get started on estate planning, please
contact a wealth manager or visit us at any of our
convenient locations in Southern Wisconsin and Northern Illinois. We have branches conveniently located in Beloit, Argyle, Clinton, Darien, Delavan, Janesville, Elkhorn, Monroe, Roscoe, Rockton, Williams Bay, Winnebago, and Walworth.
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