Three financial tips for your 60s
Is 60 the new 40? While many boomers are as physically fit as their younger colleagues, they need to act their age when it comes to finances.
It’s time to make some important decisions that could really impact the next decades.
1. Strategize Social Security.
This is when your hard work starts paying off. You can begin taking benefits as early as age 62, or as late as age 70. When’s best for you?
- When to wait: The longer you delay drawing Social Security benefits, the greater those monthly benefits will be for the rest of your life. The difference can be substantial. If you can afford to postpone payments, this could be the way to go.
- When to claim early: Six out of 10 Americans claim benefits before their full retirement age, according to the Social Security Administration. For those facing an income shortfall, starting benefits sooner might be the more practical choice.
2. Review your retirement expenses.
You need to have a realistic idea of your future financial expenses when planning your retirement.
- Add up how much you’ll need. Think about what you’ll spend on necessities, as well as any added costs. For instance, do you plan to travel or eat out more or less often?
- Include health care expenses in your budget. Over their lifetimes, the average 65-year-old couple retiring today can expect to pay more than $400,000 in health care costs, according to a recent report from HealthView Services. Your nest egg may need some extra padding.
- Take a test run. Estimate the monthly income you expect from all sources, then try to spend a year or two living on that budget. It’s a good way to know if you’re ready or not.
3. Update your estate plan.
Having an estate plan isn't enough if it isn't current. If you’ve made a change like divorce or marriage, you may need to make some updates.
- Make sure your beneficiary designations are correct. Many types of accounts, such as IRAs, 401(k)s and life insurance policies, pass to specifically named beneficiaries.
- Consider setting up trusts. You can take action now to manage how your estate will be distributed when the time comes.
- Ensure that your wishes are carried out with regard to your health, belongings and finances. If you haven’t established a living will, chosen a health care proxy or appointed a durable power of attorney, now’s the time.
Once you’ve checked off this to-do list, you can focus on the future and living life to the fullest.