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Age Based Financial Goals: 60s Retirement Preparation and Transition

What should I be focused on?   A look at financial planning milestones at various decades of a person’s life.

As we age our relationship with finances changes.  From the early years of doing chores for an allowance to late-stage estate planning our goals for finances will be impacted greatly by our age and where we are in life.   So, with that I wanted to lay out some financial planning milestones tied to where individuals are in life.

60s:  Preparation for retirement and transition into retirement.   This is the stage of life where most people will enter retirement.  Taking the steps to prepare for retirement and then making that transition are significant steps in a person’s financial life.  Here are some of the key financial planning topics to consider:

  • Run retirement projections.  Rather than going into retirement blindly, use software to run retirement projections.   These projections will use what you have saved, what income sources you have and what your needs are to see if you are prepared financially for retirement.  All projections will include some assumptions such as inflation and rate of return so it will not guarantee anything, but it will give you a good idea of where you stand.
  • Use the projections to make adjustments if necessary.  If your projection shows that you’re not fully funded for retirement use that information to your advantage.  See what changes you can make and start to make them.  Changes may include saving more, spending less, finding other sources of income in retirement or more.  The sooner you run projections, the more time you have to make adjustments.  I recommend running these projections 5 years prior to your targeted retirement date.
  • Start to consider life after working.  Retirement means different things to different people.  Some will never work another day in their life and enjoy the freedom and flexibility that comes with that.  Others will struggle without the structure and personal identification that comes with having a career.  Taking some time to evaluate your relationship with work and how you can replace that will be a major contributor to your mental well being as you transition into retirement.
  • Consider an encore career.  Many choose to “retire” from the career they have held for decades but still feel they want to do something.  This could include a passion, a charity they want to help support, travel, time with family and more.  This new encore career may create a stream of income, or it may just provide purpose.   Consider what it is you want to do if money wasn’t an option and start to position yourself for that.  People who retire to something tend to fare better than people who retire from something.
  • Adjust your investments to prepare for the distribution stage.  Many folks invest with the sole purpose of growing their wealth.   As you get closer to retirement that goal might change.  Now you may need to live on that pool of money by taking distributions.   Therefore, you should consider repositioning assets so you can use your investments to create a stream of income during your retirement years.
  • Learn about your benefits.  Social Security and Medicare are cornerstones for most in retirement.  Learn about these benefits including the rules for when you are eligible, the consequences of when begin these benefits, the impact of earning too much income and more.  
  • Begin to outline your estate plan.  If you have run projections and feel financially comfortable in retirement this is a good time to start planning for the future.  This includes the transfer of wealth, protection of assets and planning for a major late-stage medical event.

I believe the period of time prior to retirement and the transition into retirement is one of the most difficult periods in a person’s financial life.  Many financial, mental, and physical changes will happen during this time.  The more prepared you are, the better your chances of success.  Taking the steps above will help put you in a better position.