What to consider when planning for retirement in your 60s.
SERVING THE ST. LOUIS REGION
At 60, most adults are in the final stages of their career and are eyeing a new chapter in their lives: retirement. Retirement is a chance to re-establish independence, connect with friends and family, and do things you have always dreamed of doing. Though many have been saving for retirement for decades, when you hit your 60s, it’s time to prepare for what retirement will actually look like: where is your cash flow coming from, and what do you need to do to make sure it lasts?
Whether you have questions about your finances or are just looking to validate that you’re ready to retire when you planned, it’s always a good idea to have a comprehensive review of your portfolio and investments.
At Toberman Wealth, we take pride in helping our clients confidently transition from their careers into retirement. We anticipate factors you’ll face so you can reap the rewards of a life well-earned in your retirement years.
At Toberman Wealth, we recognize the importance of planning for retirement, and the urgency if you haven’t started yet. If you’re thinking of setting a plan, or already have one in place, it’s never a bad idea to revisit the topic.
Before pulling the trigger on your retirement, it’s important to review your portfolio and test its ability to meet your needs for decades to come. Start by taking a comprehensive review of your assets, and how much you’ve accumulated in your retirement and investment accounts. Once you’ve done that, it’s easier to envision how your retirement savings will transfer into retirement income.
You may discover that the current accounts won’t provide the desired income you’d like in your retirement. Consider:
By taking these steps early, you can better prepare for a seamless transition into retirement confidently and avoid surprises.
Just like in your 50s, you can continue making catch-up contributions to your 401(k) and traditional IRA. Greater contributions result in a fiscally sound financial future. Try to max out these limits or get as close as possible, especially if you’re behind on retirement savings.
A traditional IRA also offers a catch-up option that could be beneficial to building your retirement savings. However, unlike a 401(k), an IRA doesn’t provide an employer match, but it does allow certain exceptions, such as the ability to withdraw early without the 10% early withdrawal penalty. You must have earned income to contribute to a retirement account.
One of the biggest expenses in retirement is healthcare. At 65, you’ll be eligible for Medicare. However, if you decide to retire before 65, start researching health insurance options that will carry you through until you qualify. It’s also key to factor in the expense of the plan you select so you can determine how you’ll generate income from your investments to solve any potential health insurance gaps.
Social Security provides a source of income when you retire and may also provide benefits for your legal dependents after death. This taxable benefit is based on your 35 highest-earning years and factors in marital and employment status to determine its payout.
Since Social Security may also help fund your other government expenses such as a Medicare Part B plan, it’s good to have a discussion with your advisor about how to make this most beneficial to your long-term plan.
Deciding when to begin receiving your Social Security benefit will depend on your unique financial and health situation. Ideally, you want to wait as long as possible to receive the largest ongoing payment.
Though taxes may decrease in retirement, they don’t disappear and can significantly impact your retirement budget. Educate yourself about the types of taxes you’ll encounter, gather a general idea of how they’ll impact your benefits, and understand how they’ll factor into your financial future.
By having these conversations earlier, you’ll be better equipped for the variables that can unexpectedly pop up. For example, withdrawals from certain pre-tax retirement accounts such as a traditional IRA or your 401(k) will be subject to ordinary income tax. In some cases, these taxes can be considerable.
Whether you’re confident about your transition into retirement or need guidance on the next step, it’s always important to review your accounts and identify variables that could impact your financial future. Book a call today to see how you can prepare for an enjoyable retirement.
“When implementing any long-term financial and tax planning strategy (e.g., Roth conversions), always consider its impact on your total lifetime tax savings.”
CRAIG TOBERMAN, FOUNDER
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