Traditionally, once you reach your 60s, retirement is pretty much just right around the corner, and the last thing you want to do is leave the workforce before getting your financial house in order. But today is a lot different. This is because people, not only in the United States but also around the world, are not ready to retire because they are undersaved. So, in this article, we will be talking about “Top Five Financial Tips – for 60s (Pre-retirees MUST Aim for A More Secure Retirement).
How Does Your Life at 60s Probably Look Like?
If you started planning your retirement since you started your career in your 20s, then you know that it was important to begin saving for retirement as early as possible. So, you are probably able to retire anytime you want by now.
Ultimately, there are still a lot of people who continue working even they can afford to retire early – simply because they want to. You might be one of them. They enjoy the working life while enjoying the financial security, no tensions and no pressure at all. They can work with lesser loads or lesser hours, as they don’t have to worry about eating cat food or other things you hear people doing just to survive.
However, not everyone was wise enough earlier in their career. Unfortunately, people sometimes don’t realize they haven’t saved enough until it’s too late. According to a survey in 2015, which is conducted by Wells Fargo in the United States – Americans 60 and older had only around $50,000 stashed away while people at 55-59 had three times as much. Americans of all ages said that their biggest financial regret was not saving for retirement earlier.
If you’ll look around, you’ll see that there are a lot of older people who never got to follow their dreams to travel and enjoy their later years. You probably don’t want this to happen to you if you haven’t been saving for your retirement enough by this time.
The 60s As the New 50s: New Landscape of Retirement Years.
Traditionally, you’d expect most people to retire between 62 and 65 years old. But these days, people are continuously working through those years. Sometimes, that’s because they never had the opportunities to save for retirement when they were younger.
According to Department of Labor data, women age 65 and older are perhaps most susceptible to this predicament. Women, especially those divorced or unmarried, face financial hardships, possibly because they lost money in the 2008 financial crisis or because they had to leave their career to care for their family.
Things to consider if you have a little or no retirement saving according to experts:
- Work longer to build up a bigger nest egg and delay Social Security benefits.
- Your initial amount to receive increases of about 8% if you postpone retirement by another year.
- If married and in need of assistance, the spouse earning with the lesser of the two should take Social Security beginning at 66 if possible.
- Choosing to begin withdrawals between the ages of 62 and 65 while still working could reduce the benefit they receive.
Your Investment at 60s:
As the general rule of thumb, you should consider that as you get older your portfolio mix should favor bonds and forget stocks when you reach the 60s. Although your risk tolerance absolutely matters – you shouldn’t be worrying about the stock market as you sleep at night.
Downgrading your equities simply because of your age could be counterintuitive to your long-term investing goals – especially as more people live longer than they did decades ago. Keep one to three years of income in cash and short-term bonds as your liquid assets. Invest in equities so that your assets can grow continuously.
Top Five Financial Tips – for 60s: Pre-Retirees Must Aim For A More Secure Retirement.
1. A fully Loaded Emergency Fund.
An emergency fund is always important at whichever age you are. But when you’re in the latter stage of your career, you’d not want to have an unplanned bill to wreak your havoc on your near-term finances. Therefore, it’s very important to have a fully loaded emergency fund in the years leading up to retirement.
Having six months’ worth of living expenses in the bank will help you avoid debt later in the life. This will also ensure you a significant degree of security as you’re heading the notion of giving up your steady paycheck.
2. Have At Least 10 Times Of Your Net Pay In A Retirement Account.
Nothing can guarantee you that you won’t run out of money in retirement. As a general rule, roughly 10 times of your ending salary in an IRA and 401(k) is advisable to have before your retirement.
This is a good way to ensure that you have enough replacement income to cover your bills. Remember that the Social Security will serve only about 40% of the average worker’s pre-retirement earnings. Since most seniors need around double that amount to live comfortably, you will need to cover the rest. So the more savings you have, the better.
3. Pay off or Optimize Your Mortgage.
Normally, mortgage occupies the biggest part of your budget and this is something you should ideally manage to shake by the time you retire. Make sure your mortgage will be paid off before you retire because you’ll be limited to a fixed income, and you’re better off not having mortgage payments.
Unfortunately, there are a lot of people, approximately 30% of seniors in the United States, carry mortgage debt in their retirement. If you are one of these people, make sure that you refinance your mortgage loan by extending the length of your loan in order to get the least monthly payment as possible. For example, if you still have 12 years back to your mortgage loan – you may want to refinance it into 30 years if you can’t entirely get rid of it by the time you reach 67.
4. Get Rid of Your Credit Card Debt.
Carrying mortgage debt into retirement is not that ideal, but it can at least serve as a tax breaker since mortgage interest is deductible on your return. Credit card debt, however, offers no such kind of benefit and it can be extremely expensive considering the current exorbitant rates.
So, you better get rid of your credit card debts first before you officially retire.
5. Secure A Long-Term Healthcare Insurance
Now also is the time to think of the impact of health care costs on your retirement. It’s estimated that 70% of seniors will need some type of long-term health care in their lifetime. Aside from the fact the long-term health care is expensive, it’s also something that Medicare generally won’t cover.
So, if you haven’t secured a policy, you need to secure it as soon as possible during your 60s. There is no time for delays, as you are risking either a very expensive premium or denial to your application. And neither scenario is ideal for your finances when you retire.
Here’s why: According to researches, a 65-year-old man would need $72,000 and a woman of the same age $93,000 in order to have a 50% chance of enough savings to cover their health care expenses in retirement in 2016. So, having not enough savings and not having long-term healthcare insurance are you sure downfall when you retire.
I hope you enjoyed this article “ Top Five Financial Tips – for 60s: Pre-Retirees Must Aim For A More Secure Retirement. “. If you have any other financial tips for 60’s, comment or question, please feel free to write them below. Good luck to your journey to financial freedom and God bless.