You’re almost to the retirement finish line.. .or maybe you’ve even crossed it! Either way, now is crunch time when it comes to making your money work for you. If you’re in your 60s and are so close to retirement that you’re already making plans, then you need to get serious about sticking to your budget and maximizing your investments. If you’re already in your 70s and enjoying your golden years, those rules still apply to you, and maybe even more so since you’re likely on a fixed income at this point.
These varying situations make investing in your 60s and 70s a little tricky, but there are some simple rules you can follow to make it a more streamlined approach.
Follow the Guidelines to Invest in Your 50s
If you set a good foundation for investing in while you were in your 50s, then you should be in pretty decent shape. Your risk tolerance is low and your investments reflect that. You have a strict budget and are used to living within it. You may even have gotten a financial planner who is helping you decide which investment vehicles are the best for your situation.
It’s at this point that you’ll also want to look at one other potential retirement-enhancing option: life insurance. If you’re older, and even if you’re healthy, you may want to get a life insurance policy that has long term care riders, should you fall ill. It’s not a pleasant thought, but it could save you thousands down the road if the unexpected happens. Additionally, if you have your insurance in a policy like an Index Universal Life insurance (IUL) policy, then the cash value it’s accumulated can help supplement your monthly income in retirement..
Make a 10-Year Plan
Whether you’re in your 60s or 70s, it’s time to make a 10-year plan. This isn’t only to help organize your finances though. A 10-year plan also gives you something to look forward to and can help you plan within your means. Besides, by many standards, 70 is the new retirement age for most people, so why not start looking toward your next phase? Here are some things to consider when you’re drawing out your plan:
At the risk of sounding like a broken record, budget! Include large expenses like your mortgage payments and how much longer you’ll be making them. Take into account if there’s any chance you can pay it off early to avoid large monthly payments down the road. You’ll also want to look at your automobile situation. Do you own your cars? Are they older or in need of replacement? Make this decision while you’re still working so you can hopefully have them paid off when you retire; or you can even consider downsizing to one car, if that’s an option, and putting the other amount that was earmarked for a car payment into your investments.
Include your hopes and dreams. It sounds cliche, but you want your golden years to be, well, golden. This means planning ahead and making a list of things you want to do. If you don’t have a time chosen for you to retire, maybe this list will help make that choice for you. Of course, you’ll have little travels here and there, but begin to mentally set aside funds for bigger adventures and start looking into how much they’ll cost.
Start a Second Part-Time Career
Did that 10-year plan completely stress you out, wondering if you’ll have enough to maintain the lifestyle you envision? That’s ok because you still have time to start a part-time job. Choose a job that you’ll enjoy but that also doesn’t require you to learn a new skill, which will take more time. For example, if you’re a teacher, consider tutoring for a few hours a week. You may be able to do this at your school or a private tutoring company; some of these jobs even allow you to telecommute and tutor via webcam. Or if you are a computer programmer, try your hand at developing an app that you think is missing from the market. You could even do something much more simple and snag a few hours working at the local library.
Weigh your options, decide how much money you’d like to make and try to get a second job doing something you like. This may provide the income you’ve been looking for. However, keep in mind any tax considerations that are associated with your new gig. If you have questions, consult a tax professional first.
Put Off Cashing In On Social Security — Then Reinvest It
For decades, social security has been a reliable income supplement for retirees, but it shouldn’t be your only option. The longer you wait to cash in on what’s coming to you, the more it will be worth once you decide it’s time. For example, if you were born between 1943 and 1954 and start withdrawing money at 62 years old, you’ll only receive 75% of your benefit, but if you wait until 66, you’ll receive 100%
There are a lot of nuances to getting social security, so talk to a social security counselor to find out what’s the best option for your situation. And don’t forget, if you don’t need the money to live off of, it can’t hurt to reinvest it in an account like a Roth IRA, since Roths don’t have required minimum distributions, meaning it can continue to grow for years.
Continue to Rebalance Your Portfolio
Just because you’re retired doesn’t mean your money’s done growing. As long as you’ve got it in some investments, your cash is working hard to secure your future. But this means you can’t forget about managing your money just because your strategy has been working so far. Check in with your investments or financial planner regularly to find out how you’re doing and if there are other investment options you’re missing out on.
As the years go by, you’ll want to continue to rebalance your portfolio to be less and less risky. This is also when you can start getting serious about your estate planning if you haven’t already.