If you’re approaching your 60s and behind on your retirement planning, it’s easy to feel as though the money you save now won’t be enough. Rather than give in to feelings of discouragement, what those approaching their 60s can do is start saving as much as possible and making other strategic moves right now.
List Out Your Benefit Sources
As you start to develop a plan for retirement, start by identifying potential sources of income and benefits, said Sandra McPeak, managing director – investments at Wells Fargo Advisors. Some of these may include the following:
- Social Security
- Military pay
- 401(k) and other investments, like a traditional or Roth IRA
- Health savings account (HSA)
- Insurance, such as long-term care
Even more benefits might be available to you beyond what is listed here. “It’s one thing to forget where you left the remote control, but how is it possible you’ve forgotten about an unclaimed pension or 401(k) from a job you left 40 years ago, right?” McPeak said. “Trust me: it happens more than you think!”
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Log Into the Social Security Website
Your next step is going to be logging into the Social Security website. After logging in, you can see the benefits you have accrued and projections of the amount of Social Security you’ll receive monthly at various retirement ages, McPeak said.
Qualifying for Social Security and Medicare go hand-in-hand and you can find out on the website if you have enough credits with Social Security. This also allows you to qualify for Medicare.
Workers can earn four credits a year and it only takes 40 credits to qualify. McPeak said you may have accumulated enough credits from working in your 20s, so don’t assume you won’t qualify.
Max Out IRA or 401(k) Catch-Up Contributions
Maxing out IRA or 401(k) contributions is standard financial advice whether you’re planning to retire now or in the future. The advantage those over age 60 have in their corner is the ability to make annual catch-up contributions in these accounts.
“This year, the catch-up provision allows one to add an additional $6,500 to their 401(k),” said James C. Valenzuela, RICP at Foothill Financial & Insurance Services. “Along with their max contribution of $20,500, this is $27,000 they can save for their retirement.”
Those with a traditional or Roth IRA may only contribute the maximum of $6,000 per year plus an additional $1,000 over age 50. This adds another $7,000 to your retirement savings.
Look Into Social Security Spousal Benefits
If you are married, or even if you are divorced, you want to look into Social Security spousal benefits.
McPeak said you may qualify for a spousal benefit under your ex-partner’s Social Security benefits if the marriage lasted 10 or more years. Those who qualify will receive the higher benefit between benefits of their own or a spousal benefit once their former spouse has started their benefits.
Get Strategic About When To Claim Social Security
Just because you can start receiving Social Security benefits at age 62 does not mean you need to claim them right away.
While the vast majority of people claim Social Security at age 62, they’re locking in the lowest possible monthly payment for the rest of their lives, said Myriah Lipke, CFP with Stone Pine Financial Partners. Claiming Social Security at 62 means missing out on a rate of return of 8% per year.
“If you’re a little behind in saving for retirement, seriously consider waiting until your full retirement age, or better yet until age 70, to start your Social Security benefits,” Lipke said. “If at 62 you receive $1,500 per month, then waiting until 70 will provide you with more than $1,200 of additional monthly income!”
Once you pool your benefits and add them to your savings and investments, you’ll be able to calculate your day-to-day living and healthcare expenses. Those who feel they are still falling short may increase their benefits by delaying retirement and continuing to work.
Your 50s and 60s, McPeak said, are typically the highest earning years in one’s career. You can work longer and take advantage of the “golden time” in which employers want good people and are willing to train them. Or, consider a “returnship” which is an internship for adults who have been away from the traditional workforce for a while. These are gaining in popularity and they may be ideal for individuals like a military retiree or someone who left their career to care for children or aging parents.
By continuing to work longer, you can keep saving and catching up on retirement planning. Then, you’ll be able to conclude your career on a high note.
Work With a Financial Advisor
If you feel too far behind and are struggling to figure out what you can and can’t do in retirement, it’s time to enlist the assistance of a financial planner or advisor.
These individuals can help you create a retirement plan based on where you are now financially and set expectations that are both realistic and make you happy and content during your retirement years.
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