Retirement Checklist: 9 Things to Do Now in Your 60s
By Jennifer Taylor
Your sweet 60s have arrived, meaning retirement is getting close. In this era, you need get your finances in order, according to Fidelity Investments.
The financial services company created a retirement playbook, to help you navigate this major life change. Here are nine money moves to make now, to help ensure financial stability throughout your golden years.
• Gauge Retirement Readiness — You might be mentally ready to retire, but that doesn’t mean you’re financially equipped to do so. Therefore, now is the time to determine your retirement income sources, spending needs and uncover any financial gaps, according to Fidelity.
• Make a Retirement Budget — Create a spending plan for retirement to ensure your expenses will be covered. This includes reviewing your expected income sources and calculating your weekly, monthly and annual expenses, according to Fidelity. Do this at least a year before you plan to retire, so you have time to make any necessary adjustments.
• Create a Guaranteed Income Plan — An effective retirement plan should ensure essential expenses are covered, offer growth potential and be flexible enough to change with your needs — if necessary.
“Even moderate inflation can erode purchasing power over a long retirement,” said Hardik Patel, founder and financial adviser at Trusted Path Wealth Management, LLC. “Make sure your portfolio includes assets that can adjust with inflation so your plan remains sustainable even if inflation rises unexpectedly.”
• Decide When You’ll Start Claiming Social Security — You can apply for Social Security retirement benefits anytime between age 62 to 70, according to the Social Security Administration (SSA). However, the longer you wait to apply, the larger your monthly benefit.
“Determine the optimal time for you to claim Social Security based on your specific circumstances,” Kevin Feig, certified financial planner and founder of Walk You To Wealth. “Claiming Social Security isn’t like adjusting your 401(k) where you can change your mind every other week — this is a locked-in decision.”
• Get Out of Debt — Now is the time to get serious about paying off debt. Zero in on high-interest debt — especially credit cards — first, according to Fidelity.
You’re not alone, as this is a common issue. The average credit card debt for baby boomers is $6,795, rising to $9,600 for Generation X, according to Experian.
• Lower Housing Costs — Now could be a good time to downsize. In addition to your reducing mortgage payment — if you have one — moving to a cheaper area or a smaller home can reduce the amount spent on utilities, insurance, taxes and maintenance.
• Update Your Investment Strategy — Now is the time to reassess your risk profile, Patel said.
“After years of strong market returns, many investors may unknowingly be taking on more equity risk than they need,” he said. “At this stage, the focus should shift from maximizing returns to preserving what you’ve built.”
After reaching your financial goals, continuing to take unnecessary risk with your retirement fund could jeopardize the stability you’ve worked so hard to build, he said.
• Devise a Withdrawal Plan — Being smart with your retirement fund means creating a withdrawal plan. A conservative drawdown rate is recommended by Fidelity, meaning 4% to 5% of your savings the first year, then making annual adjustments for inflation.
• Monitor Tax Law Changes — Keep a close eye on tax laws, as even small changes can have a large impact on retirement income, according to Fidelity. Working with a tax professional could be a good idea, as they can ensure you’re informed on any updates and explain how they affect you.
This story was previously published online at www.gobankingrates.com. Published with permission.