Regardless of your specific plans, your 60s are about turning your savings into sustainable income, managing risk, and protecting your legacy.
1. Decide When to Take Social Security
You can begin collecting Social Security as early as age 62, but your monthly benefit increases for each year you delay until age 70. If you can afford to wait, delaying even a few years can significantly increase your lifetime payout. Your decision should factor in life expectancy, health, and spousal benefits.
2. Build a Withdrawal Strategy
You’ve spent decades saving—now it’s time to plan how you’ll use those funds. A knowledgeable withdrawal strategy can balance income needs, taxes, and market volatility. Consider the order in which you’ll draw from different accounts: taxable, tax-deferred (like traditional IRAs), and tax-free (like Roth IRAs). Work with a tax advisor to reduce your lifetime tax bill.
3. Plan for Required Minimum Distributions (RMDs)
Starting at age 73, the IRS requires you to take minimum distributions from most retirement accounts. Failing to take them results in steep penalties. Begin preparing in your early 60s by understanding how RMDs will affect your taxable income and adjusting your asset allocation if needed.
4. Consider Roth Conversions
If your income is relatively low in your early 60s—perhaps because you’ve retired but haven’t yet claimed Social Security or started RMDs—you may be in a lower tax bracket. That can create a window to convert traditional IRA funds to a Roth IRA. You’ll pay taxes now, but it may reduce future tax burdens and RMDs.
5. Review Medicare Options
Medicare eligibility starts at age 65. Research your options well before you enroll. You’ll need to choose between Original Medicare and Medicare Advantage, and possibly add Part D (prescription drugs) and Medigap coverage. The wrong choice can cost you money or limit your care options.
6. Adjust Your Investment Mix
Now is not the time to take excessive investment risk. While you still need some growth to outpace inflation, your focus should shift to capital preservation and income generation. Consider a more conservative allocation with an emphasis on dividends, bonds, and annuity-style income—balanced with some equity exposure for long-term stability.
7. Simplify and Consolidate Accounts
You may have multiple retirement and investment accounts scattered across old jobs or institutions. Consolidating them can reduce fees, simplify required distributions, and make estate planning easier for your heirs.
8. Finalize Your Estate Plan
This is the decade to ensure your estate plan reflects your current wishes. Update wills, trusts, powers of attorney, and healthcare directives. Review all beneficiary designations. You may also want to start thinking about legacy goals—such as charitable giving or leaving assets to the next generation in a tax-efficient way.
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