5 Best Financial Decisions in your 60s4 min read • January 17, 2019
You have been preparing for retirement for decades. You are so close. Now it’s time to get the final items off your plate so you can get ready and retire. This has been a long time coming, here we go!
Ace these 5 financial moves so you can finally retire (and stay retired). Shuffleboard optional.
Set Your Retirement Budget
You don’t want to blow through your retirement savings. You need a plan. Review your savings. Meet with a certified tax and/or financial planner. Set an appropriate monthly budget.
Warning! Your retirement savings needs to be there for the rest of your life. There is no backup plan. You don’t want to get stuck re-entering the workforce in your 70s or 80s. Be thoughtful about your monthly spending.
A few things you need to consider:
- Life Span – It’s tough to forecast your lifespan (aka the age at which you will die). In order to make that a little easier, add plenty of breathing room to ensure you have the money you need for the rest of our life.
- Lifestyle – Decide how you want to live in retirement. Are you happy with a quiet life or do you want to become a world traveler? What can you really afford?
- Health costs – You might be surprised to know that couples can expect to spend over $275,000 in retirement on health costs. This is on top of Medicare coverage. Plan for these expenses. As you age, your expected health costs will rise.
Keep Saving. Utilize Catch-Up Contributions
Don’t slow down. One of the most common mistakes as you near retirement is to lower your 401(k) and IRA contributions. When considering the advantages of additional tax-free 401(k) catch up contributions, this could be a huge financial mistake. These advantages let you save more now, so you will have even more in retirement.
Catch Up Contributions Refresher: Once you turn 50 you are eligible to save more in retirement plans. In 2019, anyone who is at least 50 is allowed to save $25,000 in a 401(k) plan and $7,000 in an Individual Retirement Account (IRA).
Prepare Your Investments / Portfolio
Perhaps forFor likely the first time ever, you will start taking money out of your retirement account. All the money you saved (and invested) will start coming out. This alone will require changes to your investment risk preferences and portfolio allocations.
Couple that with the monthly financial dependence on this money and you will need to seriously review and revise your retirement investments. Like with all things of this financial importance, talk to a certified tax and/or financial planner to ensure that things like market fluctuations won’t impact your retirement savings and spending.
Decide When To Take Social Security
Good news, Social Security will add extra money on top of any personal retirement savings. Deciding when to start taking these funds is the only decision you need to make. Here are the options:
- You can start as taking social security at 62 or delay until 70. The longer your delay, the more funds you will receive each month
You need to decide the which is better for your retirement plan: l. Lower monthly social security funds over a longer time period or higher funds over a shorter time period.
Need help calculating your options? Visit the Social Security Administration to estimate your benefits based on the age you begin receiving funds.
Find Your Place to Live, And Give it a Test
So what are you going to do with all of this new free time and where do you plan to retire to? While moving in retirement is clearly optional, finding a low cost- of- living location can really help stretch your retirement savings. Some nice sunshine might help you stretch your legs by the pool too! As you review this process, you should take it for a test drive. Try it out for a week or two or even more. So you can feel assured that if you move, it will be for the last time.
This goes double for your retirement budget. Try it out. Make sure it fits your lifestyle. This will help you better prepare and might even lower any anxiety about finally spending your retirement nest egg.
Where to Live? If you need some help deciding, here is a quick retirement overview on where to live.
Bonus Tip: Plan Your Retirement Party. Set a Date
You have done all of the heavy lifting so the one last question is when do you want to retire? Set a date! While the party might be optional, get your retirement plans ready and embark on this new post-employment journey.
This will really make everything become real. Bon Voyage!
And not to end this on a morbid note, but with all of this hard financial work, it’s imperative to review or set up your will. Otherwise, your loved ones might be left unprotected. Welcome to retirement!
Financial Decision Series
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered 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 investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.