Staying on Track

When you’re trying to keep your retirement planning on track in your 60s, come up with a retirement income plan. That way, you’ll know where your money will come from. Also, set up a withdrawal plan for your savings to help avoid outliving your money.

By Catey Hill

Your 60s are the start of a new part of your life. With the kids out of the house (hopefully!) and your home almost or fully paid off, you (finally!) have fewer responsibilities. Now you’ll want to be sure you’ll be able to enjoy your life in retirement. So take a close look at how likely you are to achieve your goals and then make any necessary adjustments. Use this checklist to help stay on track:

  • Work with a financial advisor
    A financial advisor can help you refine your retirement strategy and take advantage of suitable ways to save.

  • Keep on saving
    Don’t stop putting money away for your future just because you plan to stop working full-time soon. Since women, on average, live longer than men, you’ll want to have enough in savings to last at least 25 years or more in retirement.
It’s very important to calculate how much of your retirement savings to withdraw each year.
  • Continue benefiting from the catch-up rules for saving
    Just as when you were in your 50s, the IRS lets you contribute an additional "catch-up" amount to your IRA and your 401(k) each year beyond what people under 50 can put in. For IRAs, this means you can contribute $6,500 ($1,000 above the standard limit) in 2015; for 401(k)s, you can put in $24,000, a full $6,000 more than the standard limit in 2015.

  • Monitor your investment mix
    In your 60s, you’ll want to tilt your portfolio towards security, rather than growth. By utilizing a suitable asset allocation strategy and dividing your dollars among a variety of investments, you can decrease the likelihood that all the investments in your portfolio decline at the same time. Of course, by the same token, it’s also unlikely that every investment in your portfolio would go up at the same time. Bear in mind that although asset allocation can help diversify your portfolio, it does not protect against fluctuating prices or uncertain returns.

  • Develop a detailed retirement income plan
    Your retirement income plan will tell you where all of your money will be coming from, such as Social Security, a pension, savings plans, and investments, as well as how much you’ll get annually.

  • Look into rolling over your 401(k) into an IRA
    If you currently have a 401(k), you may be interested in learning if a rollover IRA is right for you. Get materials from your benefits department about how to do it, so you’ll be ready when the time comes.

    Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options is different and may have distinct advantages and disadvantages.
    1. Roll assets to an IRA
    2. Leave assets in your former employer’s plan, if plan allows
    3. Move assets to your new/existing employer’s plan, if plan allows
    4. Cash out or take a lump sum distribution

    When considering rolling over assets from an employer plan to an IRA, factors that should be considered and compared between the employer plan and the IRA include fees and expenses, services offered, investment options, when penalty free withdrawals are available, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with employer-sponsored retirement plans. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.
  • Talk to your tax advisor about converting a Traditional IRA to a Roth IRA
    A Roth IRA doesn’t ever require you to withdraw money. By contrast, a Traditional IRA has Required Minimum Distribution rules, which means you must start pulling money out after you turn 70 ½. You might also want switch to a Roth IRA if you plan to leave the money to your heirs. They will be required to make withdrawals in the future, but since the rules are based on their life expectancy, they’ll likely have many years for the Roth IRA earnings to compound tax-free. Converting a Traditional IRA to a Roth IRA is not suitable for all investors. Before making any decisions such as this, which involve tax consequences, it is important to consult with your tax and financial professionals to see if this may be a suitable strategy for your specific situation.

  • Think about consolidating your retirement accounts
    By this point, you may have quite a few 401(k) plans from former employers, as well as multiple IRAs. By rolling them into one IRA, you can cut down on your paperwork and also avoid having duplicate investments. Again, remember that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each option has advantages and disadvantages, including investment options and fees and expenses, which should be understood and carefully considered.

  • Plan a withdrawal strategy to help make your income last
    It’s very important to calculate how much of your retirement savings to withdraw each year. Take too much too soon and you may run the risk of outliving your assets.

  • Look into long-term-care insurance
    This type of policy can help meet expenses that could deplete your estate if you or your husband has an extended illness.

  • Think about your legacy
    Meet with an estate lawyer to discuss trusts, beneficiary designations, and lifetime giving programs. All these estate-planning strategies may help you pass a larger amount of money to your loved ones.

Catey Hill is money editor for the New York Daily News online and author of SHOO, Jimmy Choo!

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