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How to Prepare for Retirement in Your 60s

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It’s important to prepare for retirement, whether it’s right around the corner or decades away. Decide what you plan to do in retirement and therefore how much money you’ll need in your retirement fund. What’s your H.E.A number? Do you have lofty goals of traveling, pursuing hobbies, and living in a grand home? Or do you plan to have a modest retirement, possibly downsizing to a smaller home and continuing to work into your retirement years?

Once you know what your goals are, prioritize how you will save to fund those goals, and how you will spend the savings when the time comes. Remember, retirement can last 20-30 years, so it’s important to be prepared financially.

Below are some recommendations for preparing for retirement in your 60s. Be sure to read our related posts on preparing for retirement at every age.

 

How to prepare for retirement in your 60s

 

Plan where you will live

Plan where you will live to claim retirement benefits. Taxes and cost of living differ from state to state, with some states being very retirement-friendly. It’s important to decide not only in what state or country to reside, but also in what type of home. Both of these will affect taxes and expenses in retirement.

 

Create a budget

Create a budget or “spending plan” for your retirement income. The general rule of thumb is to withdraw 4% of your retirement savings to live on each year. Make sure the amount you withdraw is sustainable and can cover all of your expenses.

 

Consider delaying social security collections

Consider delaying social security collections until age 70 or as late as possible. The older you are when you start collecting, the higher your benefit will be.

 

Sign up for Medicare

Without employer-sponsored health insurance, you’ll likely be relying on Medicare for the majority of routine healthcare costs. However, Medicare doesn’t cover all medical expenses, so be sure to have additional plans in place for long-term care and additional medical costs.

 

Strategize your withdrawals

For the most tax-advantaged use of your money, tax professionals typically recommend withdrawing from taxable accounts first, then tax-deferred accounts, then tax-free accounts. This allows tax-deferred and tax-free accounts to grow as long as possible.

 

Top Tip:

No matter your age, the most important thing you can do to be financially prepared for retirement is save money. The earlier you start, the better, but it’s never too late. Starting today is better than starting tomorrow.

Sources: Department of Labor, Ameriprise, CNBC, Bank of America, Investopedia, IRS, Fidelity

 

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