You are likely to be in your 60s when you enter retirement. Before you make any big decisions, consider your current retirement finances and how they align with your long-term goals.
Review and update your retirement plan
Are you on track for the lifestyle you want in retirement? Some tips to consider:
- Create a vision. The sooner you bring your retirement into focus, the greater your chances may be for realizing the retirement you want.
- Check your accounts. Check to see if you have enough savings to retire when you want to, or whether you may want to save more. Use our Retirement Quick View Calculator.
- Review your asset allocation. Ensure your investment and asset allocation strategy is aligned with your goals.
- Assess monthly expenses. Assess what your monthly expenses (PDF) may be in retirement. You may even consider living on what you expect your retirement income to be, if it's less than your current income, to see how it feels.
It may be difficult to predict how much you will need once you retire. You may want to continue to save to increase the likelihood of having the flexibility you may need.
- Consider ramping up your current contributions. You may need to be saving more of your income while in your 50s and 60s to close any gaps.
- Take advantage of "catch-up" contributions. If you're already saving up to the maximum amount allowed by the IRS, you may also want to consider making "catch-up" contributions to your retirement plan.
- Contribute financial windfalls. Consider setting aside financial windfalls such as bonuses, raises, and tax refunds as a way to help accelerate your savings.
- Maintain your emergency fund. Most experts agree that you should keep 3 – 6 months of your living expenses set aside in an easy-to-access account such as a checking or savings account. If you haven't already, consider an emergency fund in case something unexpected arises.
Develop your income plan
The goal of a retirement income plan is to create a sustainable, predictable stream of income.
- Create your withdrawal strategy. Consider creating a plan to withdraw the right amount from the right retirement accounts to increase the likelihood you don't outlive your savings. One common rule of thumb is to not withdraw more than 4% of your savings on an annual basis.
- Consider your options. Understand the role that guaranteed income with annuities can play in helping you meet essential expenses in retirement.
- Consolidate. Consider simplifying your finances by consolidating multiple savings accounts into one retirement plan account.
- Continue to revisit your plan. Think about having an established and updated income plan that details how you'll pay yourself in retirement. Planning ahead could help to protect you from outliving your savings. To help you get started, explore an informative and interactive tool, Your Income Story. It can assist you in creating a profile of your retirement needs and goals.
Consider speaking with a financial advisor to help you work toward an income plan.
Protect yourself from the unexpected
Retirement often brings unexpected challenges and opportunities. When you experience the unexpected, it helps to have your finances and financial documents in order.
Prepare for contingencies
Consider having the following financial tools in place.
- An up-to-date will. In some states it may also be necessary to set up a trust.
- Updated beneficiary designations. Check that beneficiaries on your retirement accounts are up to date.
- Durable powers of attorney. Ensure that someone you trust is appointed to make decisions for you if you are unable to do so.
- A trust. A trust can be established to address special issues like blended families, caring for family members with special needs, or charitable giving.
Review your insurance policies
- Protect your loved ones. Consider additional life insurance protection to provide for loved ones.
- Consider long-term care. Learn about long-term care insurance, which can help meet expenses that could deplete your estate in the case of extended illness.
- Protect your home. Consider making sure your home is sufficiently covered by homeowner's insurance.