Building Retirement Savings at Any Age: Part Three of Three
In Your 60s:
Check Your Progress.
Retirement may have seemed like a distant dream when you first began to save for it, but by the time you reach age 60, retirement may be in the near future. It is time to pull out all the stops to make your retirement dreams a reality. Start by assessing your progress to your retirement saving goal. Are you on track to reaching that amount in the time remaining? If so, great! If not, discuss with your financial advisor what you can do to increase the amount of your retirement savings.
Take Steps to Address any Potential Shortfall in Your Retirement Savings.
If it looks like you may fall short of your retirement savings goal, there are things you can do to improve your situation.
- Reduce your spending so you can afford to save more.
- Downsize now rather than in retirement. Living in a smaller home may save you a bundle on utilities, maintenance, repairs, and property taxes- money that you can use to bolster your retirement savings.
- Be wary of investing too conservatively. If you are not on track to your retirement goal, you may need the potential for higher returns offered by stocks.
- Work a few more years. Delaying retirement gives you time to save more money for retirement and reduces the time that you will need to rely on your savings. Plus, continuing to work through your sixties may make it possible for you to hold off beginning Social Security benefits, which will permanently increase their size. For every year that you delay the start of Social Security benefits, between your full retirement age and age 70, your monthly benefit will increase by 8%.
Review Your Investment Mix.
With retirement right around the corner, preserving your nest egg takes on added importance. It is generally a good idea to shift to a more conservative investment mix as you draw closer to the time when you will need your money. This generally entails shifting to more bonds and cash and fewer stocks. But before you trim your stock holdings too much, be sure to consider that although the first year of your retirement may be just five or ten years away, your retirement may stretch for thirty or more years. You may want to maintain some exposure to stocks, with their potential for higher long-term returns, in order to help our savings outpace inflation and last for your retirement. As always, you financial advisor can help you determine and maintain an appropriate asset allocation.
Plan How You Will Tap Your Savings.
By the time you are ready to retire, you may have savings stashed in a variety of accounts, such as retirement plans, IRAs, as well as regular savings and investment accounts. Will the interest and dividends you receive from these accounts be enough to supplement your Social Security benefits, pensions, and any other steady retirement income you expect to receive? Or will you need to withdraw some of the principal from your savings each year? How much can you withdraw each year and still have a good chance of your nest egg lasting thirty or more years? Which accounts should you tap first? The time to answer these questions is in the months leading up to your retirement. Your financial advisor can help you create a retirement income plan so that you know from day one of retirement how to draw on your savings in a potentially sustainable manner that helps you live comfortable in retirement.
PLEASE NOTE: All investing involves risk, including the possible loss of principal. Bonds are subject to interest rate risk. When interest rates rise, bond prices usually fall. The effect is usually more pronounced for longer-term securities. Fixed-income securities also carry inflation risk and credit and default risks for both issuers and counterparties.