Reaching your 60s will involve another set of money concerns that you have to deal with. Just like your 20s differ from your 30s, your priorities will change once you reach the age of 60 and above. Obviously, your primary concern will involve your retirement. In most cases, the thing that has pre-retirees worried is how to keep the retirement fund from retiring before them.
Your retirement may or may not be the best time of your life. That will really depend on how well you prepared for it. When you are in your 60s, you will realize that you are already at the homestretch and that time and money will both be very crucial. You can to carefully consider how you will spend your time and money so that you can maximize your preparations for your retirement.
Statistics show that a lot of Americans have botched their retirement funds and are not as prepared as they should be. In fact, StatisticBrain.com compiled data that revealed how the average savings of those 50 years and above have less than $44,000 in their accounts. With the rising cost of living, the incredibly high healthcare costs and the still fragile economy, this amount is not enough. The same website revealed that the average medical treatments of a couple that is 65 years and above is $215,000 – that is for a span of 20 years.
Considering the amount of finances that you have to spend when you retire, you know that your retirement fund is one of the most important money concerns that you need to face in your 60s.
7 important financial tasks when you reach your 60s
Given that data, it is evident that you need to arrange your finances so you can have a good retirement. The great thing about this age is that you are typically at the peak of your earning capabilities because of your expertise. Not only that, most of your expenses should have been paid off by now. That will free up a huge amount to be used as your disposable income. Before you decide to use all that extra money to buy a new car or something extravagant yet unnecessary, here are 7 financial tasks that you need to accomplish in your 60s.
Look at your credit situation. First of all, you want to consider any debt that you still have to pay off. In most cases, your mortgage should have been paid completely by now, unless you have refinanced it in the past. But if not, your main debt may be on your credit cards. You have to complete your payments before you retire. While your priority right now is to save for your retirement fund, you need to seriously address your debts first. It is difficult to save for retirement while drowning in debt but it will even be more difficult if you carry your debts in retirement.
Get an estimate of your Social Security Benefit. According to Statistic Brain, 35% of those who are 65 years and above are solely relying on their Social Security Benefits. If this is where you are headed because you failed to save up for a separate retirement fund, you need to know just how much you will be receiving. A snapshot of statistics from the SSA.gov revealed that the average monthly benefit that is received by an individual is at $1,184.76. If this is your plan, you should know that this will not be enough for you. You can explore the website to get an actual computation of the benefit that you will receive. But the chances of you getting an amount that is a lot higher than this average is not likely to happen. Get the estimate of your Social Security benefit to determine how much you still need to raise.
Review your retirement plan. If your money concerns at this point revolve around your retirement, then part of your tasks will be to review your plans. In case you do not have one, this is something that you have to create. But if you do have one already, check your 401(k) (or the retirement plan alternative) to see how much money you can expect to receive from it every month.
Create a new budget for your retirement life. While you do not have to follow it yet, you may want to draft the budget plan that you will be using when you retire. This is a great way for you to gauge how much money you will need on a monthly basis. You can foresee any money concerns that you will encounter once you are fully reliant on your retirement fund. Here is a video from National Debt Relief that will provide you with tips on how you can set up a realistic budget that will suit your specific retirement lifestyle needs.
Decide how you will take your retirement money. Another concern that you have is to decide on is how you will withdraw your money. Will you get a lumpsum amount or will you have it mailed to you on a monthly basis like a paycheck? Or you can have it sent to you every year. There are options for you to choose from and each of them have their own tax implications. Make sure you know your choices well.
Check your medical insurance. Your health care expenses will take up a big part of your money concerns once you retire so you need to prepared the funds for that. You may want to check out any medical insurance that you can get. There is also Medicare that you can see if you are already eligible for. That way, you know if you need to get a private coverage for your specific health care needs.
Plan how you will leave your assets behind. While we do not want to think about it, you need to be prepared to leave your assets to your loved ones when you pass away. This is an important preparation that you need to look into to ensure that your spouse and children will be taken cared of when you are gone. Talk to a lawyer or a financial advisor about your options.
What to do if the amount in your retirement fund is a major money issue?
The 7 financial tasks that we just talked about will help deal with the money concerns surrounding your retirement fund. But in case you are sure that your funds will not be enough, here are three things that you can look into.
Catch up on your contributions. The IRA allowed consumers that are 50 years and older to increase their retirement funds by maximizing the catch up limits. For those contributing to 401(k) plans, they can contribute up to $23,000 on their funds. For the IRA plans, Up to $6,500 can be contributed every year.
Extremely downsize your lifestyle. If your funds will not be enough to support your lifestyle, then one of the obvious things that you need to do is to downsize your lifestyle. You can live in a smaller home or move to a state that has a lower cost of living. You can even go as far as to move to another country. According to an article published on Forbes.com, the top three retirement destinations are Panama, Ecuador and Malaysia. They are considered the top spots because of the low cost of living, weather, health care, real estate costs and the overall retirement infrastructure.
Work while in retirement. Lastly, if you really think that your money will not last without any monthly contributions, you may want to consider setting up a business or keeping yourself employed so you can continue to earn. Of course, you need to know the important facts about working in retirement first. Understand the tax implications and the option that you have in case you want to continue to be employed.
Make sure to consider all the money concerns in your 60s so that you will not have a hard time in your retirement.
Diana hates debt just as much as you do. She is a finance writer for National Debt Relief. She aims to provide the best information to win the battle against debt.