Key Takeaways
- Many significant life changes take place at age 70+, many with financial implications.
- Older adults can be grouped into three categories: “young old,” “old,” and “old old.”
- Many financial transitions are tied to specific ages (e.g., RMDs, Social Security, QCDs).
- New first-time expenses and new housing choices often occur at age 70 and beyond.
- Many older adults have increased interest in simplification and philanthropy.
There are two decades in people’s lives where they experience a lot of changes: their 20s, as they transition to independent living, and their 70s, when they experience many new life transitions related to the aging process.
Psychologist Bernice Neugarten described three phases of older adulthood: “Young Old” (ages 65 to 74), “Old” (ages 75 to 84), and “Old Old” (age 85+). Financial author Michael Stein coined the terms “Go-Go” years,” “Slow-Go” years,” and “No-Go” years,” respectively.
Sometime during their 70s, older adults cross over into the second phase of older adulthood, where they experience new financial challenges that might include incurring new debt.
Fifteen transitions experienced by septuagenarians (people age 70 to79) are described below:
Social Security Benefits
- Benefits should be claimed by age 70 because delayed retirement credits no longer apply after this.
- At age 70, workers receive 132% more than their full retirement benefit if their full retirement age (FRA) is 66 and 24% more if their FRA is 67 (people born in 1960 and later).
- Continued work at age 70 and beyond may boost benefits if earnings are higher than low-earning years in young adulthood. Benefits are based on the highest 35 years of earnings.
Required Minimum Distributions (RMDs)
- RMDs are mandatory, formula-based withdrawals from tax-deferred plans (think traditional individual retirement accounts—or IRAs—and 401(k) and 403(b) plans funded with pre-tax dollars). They must begin sometime during one’s 70s.
- The starting age for RMDs is age 73 for people born from 1951 to 1959 and age 75 for those born in 1960 and later.
- Ordinary income taxes are owed on pre-tax savings plan contributions and retirement plan earnings.
Young Old (Go-Go) Mindset (Early 70s)
At age 70, people start to wonder how many “good years” (with vitality, mobility, good health) they have left to travel, work, volunteer, and enjoy hobbies, sports, and entertainment. As a result, many “young-olders” try to pack as much as possible into their remaining “go-go” years and aggressively work on their “bucket list.”
Go-Go to Slow-Go Transition (Mid to Late 70s)
Reasons why people slow down during their 70s include health and/or mobility issues (themselves and/or a spouse) and widowhood, which results in the loss of a travel companion. As a result, they may cut back on activities and choose less active socialization methods (think poker instead of pickleball).
Research indicates that household spending typically decreases compared to Go-Go years. Reduced spending can help offset some of the impacts of high inflation.
New Expenses
Septuagenarians may incur the following expenses for the first time: hearing aids, walkers and wheelchairs, dentures, lawn care and housekeeping services, and the need for in-home health care and/or long-term care.
Lasts and ROLE Calculations
In their 70s, people’s time orientation changes. As I describe in my book, Flipping a Switch, they start doing “return on life expectancy” (ROLE) calculations (comparing how long things—e.g., a pet or appliance—will last in relation to their age and life expectancy) and thinking about lasts (e.g., last pet or last car).
Simplification and Downsizing
An eighth decade of life and forthcoming RMDs may increase the sense of urgency to simplify. Ways to do this include:
- Gifting, selling, and/or donating unwanted items
- Closing subpar accounts (e.g., high expense mutual funds and low APY savings accounts)
- Shredding unnecessary documents
- Consolidating “like” assets (e.g., multiple individual retirement accounts)
New Housing Choices
It is not always possible to “age in place.” Life events experienced at age 70+ (e.g., poor health, gray divorce, widowhood, loss of income) may precipitate new housing arrangements.
Common choices in later life include: moving closer to family, multi-generational housing with family members, shared housing with siblings or friends, staying put with a reverse mortgage to help pay expenses, an assisted living facility, or a continuing care retirement community (CCRC).
Increased Risk of Diminished Capacity
The risk of mild cognitive impairment (MCI) and dementia increases with age and accelerates in the mid- to late-70s. Difficulty with financial management (e.g., bill paying, and balancing a checking account), problem-solving, and decision-making are common “red flags” well before the onset of a serious cognitive illness. For this reason, trusted contact information should be provided for financial accounts and advisors.
Shortened Investment Time Horizon
People age 70+ don’t have as much time for market rebounds vs. younger investors. Nevertheless, their investment time horizon is their remaining life expectancy. A healthy 70 year old could live to age 90, 95, or older, which is plenty of time to ride out market volatility. Investors are generally advised to reduce the percentage of their portfolio in stocks as they get older.
Income Taxes
Septuagenarians may find themselves paying higher taxes on a higher taxable income when RMD withdrawals begin. In addition, a higher tax bracket and income taxes often result following widowhood with a change in filing status from married filing jointly to single.
Example: In 2025, couples are in the 12% tax bracket with an income up to $96,950. For single taxpayers, the 12% tax bracket ends at $48,475 before moving up to the 22% tax bracket.
Older single taxpayers also face lower “trigger” amounts for income tax on Social Security benefits, the IRMAA surcharge for Medicare premiums, and the net investment income tax (NIIT).
Legacy Planning and Philanthropy
The phrase “You can’t take it with you” takes on a heightened meaning as people get older. This is especially true for people who realize they have enough saved to not run out of money. People who have been “lukewarm” donors to charities may step up donations at age 70+. Strategies to get a tax benefit for charitable gifts include “bunching” itemized deductions (including charitable gifts), gifting appreciated securities, and establishing a donor advised fund (DAF).
Qualified Charitable Distributions (QCDs)
When older adults reach age 70 ½, they are eligible to donate money directly from a traditional IRA to a tax-qualified charity via a QCD. QCDs remove funds from a traditional IRA before RMD age (i.e., between age 70 ½ and age 73 or 75) or count toward a taxpayer’s mandatory RMD withdrawal once RMDs have begun. The maximum QCD amount in 2025 is $108,000 per person.
Final Financial Gap Years
The financial “gap years” are the time between age 59 ½, when the 10% penalty on early distributions no longer applies, to RMD age. At age 70, people still have 3 or 5 financial gap years remaining. Commonly recommended tax reduction strategies during this time period include:
- Roth IRA conversions in stages over several years while you are in a lower tax bracket.
- Realizing long-term capital gains and redeeming U.S. savings bonds before RMDs begin.
- Using QCDs to reduce traditional IRA assets subject to RMDs.
- Consider taking taxable distributions before RMDs must begin to spread the tax liability over a longer time period.
Long-Term Care Planning
People in their 70s and beyond realize they are not getting any younger or sharper. It’s time to hold long-postponed conversations about bequests to heirs, end-of-life care, caregiving expectations, burial wishes, and more. It is also time to make sure that a long-term care (LTC) plan is in place. Options for long-term care planning include the following:
- A long-term care insurance policy, ideally purchased by one’s late 50s or 60s. By age 70, premiums are very high and LTCI may not even be available due to health issues.
- Self-insurance with earmarked assets (e.g., 3 years of care @$100,000 = $300,000).
- Self-insurance with guaranteed income sources (e.g., pension, Social Security, annuity).
- Planned reliance on Medicaid and/or family members (be sure to discuss this with them!)
- A CCRC for a continuum of care from independent living to skilled nursing, if needed.
Personal finance can be complex after age 70. If you have questions and concerns, consider reaching out to a legal or financial professional (e.g., a fee-only financial planner) who can assist you. If high debt is an issue, consider options like credit counseling, the avalanche and snowball methods of accelerating debt repayment, debt consolidation, and debt settlement.
