The Lively Blog

SIGN UP FOR OUR

Newsletter

Stay up to date on the latest news delivered straight to your inbox

How to Approach Your Taxes in Your 50s

Lively · July 11, 2019 · 3 min read

taxes-in-your-50s.jpg

As you settle into your 50s, you may feel busier than ever before. Trying to juggle your ever-increasing family activities with demands at work isn’t easy. With so much going on, it’s easy to overlook one of your biggest milestones yet to come: retirement. Like it or not, your golden years maybe a decade or less away. In the race to reach your retirement goal, every dollar counts. If you are feeling anxious about your savings or lack thereof—it’s time to be proactive with your taxes.

Make catch-up contributions to your retirement plans  

As you get older, the IRS offers incentives to supercharge your retirement savings. The benefits of doing this are two-fold: more money for retirement and a way to reduce your taxable income.

Once you turn 50, you can make a $6,000 catch-up contribution to your retirement plan every year. This is on top of your regular $19,000 contribution. The following workplace retirement accounts are eligible.

  • 401(k)

  • 403(b)*

  • SARSEP

  • 457(b) 

*If you have at least 15 years of service, you may be eligible for another 403(b) catch-up contribution. You can learn more about your contribution limits here.

Don’t worry—there’s a catch-up contribution for individual retirement account (IRA) holders, too. You can deposit an extra $1,000 to your traditional or Roth IRA. Roth IRA contributions won’t reduce your taxable income, but the money will be tax-free in retirement.

Leverage your health savings account (HSA) to save for healthcare expenses

The rising costs of healthcare is one of the inevitable parts of growing older. A couple can expect to spend a whopping $300,000 on healthcare in retirement, according to Fidelity. And that’s not including the potential expense of long-term care. 

If you are eligible, a health savings account (HSA) may be a small way to ease the sting. You can contribute $3,500 as an individual or $7,000 as a family every year. Once you are 55 or older, you can contribute another $1,000.

HSAs offer three separate tax benefits. Your money goes in pre-tax. You can invest and grow the money tax-free. Withdrawals for qualified medical expenses are tax-free.

Know the tax consequences of raiding your retirement accounts early

As you get closer to your 60s, you may be eager to start tapping your retirement accounts. But before making withdrawals, it’s important to understand the tax consequences. 

  • IRAs – In most cases, you will have to pay a 10% early withdrawal penalty if you take money out before age 59½. There are some exceptions, like using the funds to pay for health insurance after losing your job. 

  • 401(k) – If you make a withdrawal before age 59½, you will have to pay a 10% early withdrawal penalty. There are some hardship exceptions to this rule. 

  • HSAs – If you withdraw money for non-qualified medical expenses, you will have to pay a 20% penalty.

Consider working with a financial advisor

As you get closer to retirement, there is a lot more at stake. You may be eager to make sure there is enough money for retirement. Or, you may want to start talking about your legacy. Either way, it’s a good time to consider working with a financial planner. With the proper guidance, you will be well on your way to a more secure financial future.

Suggested Readings:

Lively

Lively

Lively is the modern HSA experience built for—and by—those seeking stability in the ever-shifting healthcare landscape. By harnessing modern innovation and deep industry expertise, Lively is committed to bridging today’s savings with tomorrow’s unknowns. Unlike traditional institutions hindered by bureaucracy, Lively’s commitment extends beyond initial set up to providing dedicated, ongoing support and education for every step. So each HSA can reach its maximum potential with minimal headache.

piggy bank on pink background

Benefits

2023 and 2024 HSA Maximum Contribution Limits

Lively · May 16, 2023 · 3 min read

On May 16, 2023 the Internal Revenue Service announced the HSA contribution limits for 2024. For 2024 HSA-eligible account holders are allowed to contribute: $4,150 for individual coverage and $8,300 for family coverage. If you are 55 years or older, you’re still eligible to contribute an extra $1,000 catch-up contribution.

comparing hsa versus fsa

Benefits

What is the Difference Between a Flexible Spending Account and a Health Savings Account?

Lauren Hargrave · February 9, 2024 · 12 min read

A Health Savings Account (HSA) and Healthcare Flexible Spending Account (FSA) provide up to 30% savings on out-of-pocket healthcare expenses. That’s good news. Except you can’t contribute to an HSA and Healthcare FSA at the same time. So what if your employer offers both benefits? How do you choose which account type is best for you? Let’s explore the advantages of each to help you decide which wins in HSA vs FSA.

Benefits of HSA employer matching

Health Savings Accounts

Ways Health Savings Account Matching Benefits Employers

Lauren Hargrave · October 13, 2023 · 7 min read

Employers need employees to adopt and engage with their benefits and one way to encourage employees to adopt and contribute to (i.e. engage with) an HSA, is for employers to match employees’ contributions.

Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.

SIGN UP FOR OUR

Newsletter

Stay up to date on the latest news delivered straight to your inbox