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6 Smart Money Moves to Make in Your 60s

By Ellevest Team

They’re finally here: your 60s. All those years saving and investing for your dream retirement, and things are starting to feel actually real — this is the decade most Americans plan to retire.

6 Smart Money Moves to Make in Your 60s

It’s also a decade when setting yourself up for financial independence (if possible) can start to feel real, too. 90% of women manage their own money at some point in their lives, and part of that’s because women live six to eight years longer than men on average … and often longer than that.

So what are the smart money moves to make right now?

1. Manage your retirement accounts

One piece of money advice you’ll hear as you get closer to retirement is “consolidate your accounts.” This may or may not be exactly right for you, though.

Why to consolidate

It’s a lot easier to keep track of your statements, balances, logins, etc. if everything’s in one place — either in your current employer’s 401(k), if the plan allows it, or in an IRA. Plus, 401(k)s and traditional IRAs come with required minimum distributions (RMDs): withdrawals you have to start taking at age 70½. If you miss an RMD, you’ll get hit with big penalties. So it can be good to have fewer accounts and RMDs to keep track of. You might also be able to get a broader investment and lower fee selection, depending on your current accounts.

Also, asset allocation (the mix of stocks, bonds, etc. in your investment portfolio) is super important. When someone’s retirement is a long way off, they’ll typically take more investing risk — which typically means there will be more equity in their portfolio. But as you get closer to retirement, your portfolio should usually get more conservative, with an asset allocation that contains more lower-risk investments such as bonds. That’s so your portfolio will be less impacted if a significant market downturn occurs right before you retire. (Ellevest does this automatically if it’s right for you.)

When you have lots of different retirement accounts, it’s much, much harder to make sure that the asset allocation across all of them, taken together, is right for you. And making adjustments to correct your asset allocation will probably be complicated, too.

Why not to consolidate

If the fees and investment options in your current accounts are really good, or if they’re really bad in the account you’d consolidate into, it may be worth dealing with multiple accounts. Or if you have a special tax situation, like if you have company stock in a 401(k) — you may need to let some accounts stay where they are.

If you do decide to stick with multiple accounts, make a game plan for how you’ll withdraw in a tax-efficient way. Some tax experts suggest withdrawing from taxable accounts first, tax-deferred accounts second, and tax-free accounts last, if you have all three. But it depends a lot on your personal situation and what kinds of accounts you have, so this is one place where a financial planner can really help. (Btw, we know a few.)

2. Give your retirement a practice run

Sitting on a beach is definitely fun for a week (or twelve), but it might get boring if that’s the only plan for the next 25 years of your life. Or maybe you have some post-retirement plans in mind but haven’t done more than daydream so far.

If you can swing it, consider taking a month or two off from work to see if your retirement plans will work for you long-term. Or maybe you drop down to part-time or consulting (or board of directors?) work for a while to explore what else you want to do before

You’ll also want to make sure that your financial logistics are doable. Spend a few months living on the income you plan to pay yourself during retirement. At Ellevest, we aim to get you on track for 90% of your pre-retirement income so that you’ll have a healthy cushion for travel, healthcare, emergencies, and a long post-retirement life ahead. (But you can adjust that to fit where you are financially and what you want to do.) Bonus: You can put what you save during this “trial run” into your retirement account.

If some course correction is in order, think about how you might be able to add to your retirement income while still living your ideal lifestyle. How can you take one of your passions or hobbies and use it as an income stream? Maybe you love to paint — you could give painting lessons or sell your work on Etsy. Or maybe you want to travel — you could take a part-time job for an airline … with free standby perks.

3. Invest for what’s next

Just because you’re almost to retirement doesn’t mean you have to stop investing.

First, yep — more retirement investing. Some people find it hard to see the point in making retirement account contributions when they’re just going to start withdrawing soon. But you aren’t going to take all your money out of your retirement account as soon as you stop working; a lot of that money is going to stay there for the next 10, 20, 30 years. So it still has plenty of time to grow tax-deferred (or tax-free if it’s a Roth account).

Something to note, though: When you’re investing toward retirement, you’re investing to build as big a nest egg as possible. At Ellevest, we help you do this by adjusting your portfolio to get more conservative as you get closer and making sure you’re well diversified. But once you actually retire, you’re going to want your portfolio to generate as much income as possible by choosing in investments that pay things like dividends, interest, or maybe even a guaranteed amount of income (aka an annuity). There’s some overlap, but it isn’t necessarily the same thing, and everyone’s situation will be a bit different. So when it comes to retirement income planning (as this is known), a financial planner can be really helpful.

And you haven’t been planning this retirement during your working life for nothing. Ellevest’s goal-based investment portfolios can help you with some of the dreamier things you’d like to do when you get there. Like the beach house in the Outer Banks (our Place to Call Home goal). Or a cruise around the world (our Big Splurge goal). Sky’s the limit, really.

4. Have a game plan for long-term care

It may not be the most fun thing to think about, but an estimated 52% of Americans turning 65 today are expected to require some sort of long-term care in the future, whether it’s medical care or just assistance with daily tasks. And that stuff’s expensive.

If you don’t have long-term care insurance or another plan in place, you may have to pay for it out of pocket or rely on family or Medicaid. But no matter what you’d do in that situation, it’s good to explain your thinking to the people who’ll be affected sooner rather than later.

5. Plan your legacy

Now’s the time to help make sure that the wealth you’ve built is taken care of in the future. First, get all your estate planning documents in place and up to date. This includes, at minimum, a will (or revocable living trust), power of attorney, living will (aka an “advance directive,” which tells people what kind of medical care you’d want if you couldn’t communicate those choices on your own), and medical power of attorney.

Life is long, children are born, loved ones pass away, and marriages change. Is the beneficiary designation on all your accounts up to date? Do those accounts have an updated “transfer on death” (TOD) designation, which would allow your money to pass to your beneficiary without the headache of a legal process?

Getting your paperwork organized might also spur you to think hard about what you want your money to do when you no longer need it. Many people leave their estate to family, but you might also want to leave some to a non-profit you care about deeply. Or maybe you want to do both, in which case a charitable trust could be right for you. (We definitely recommend discussing these decisions with a lawyer and financial planner.)

6. Retire like a boss

And finally, get out there and live your best retired life. You worked hard — professionally and financially — to get here. You earned it.

Disclosures

© 2018 Ellevest, Inc. All Rights Reserved.

Information was obtained from third party sources, which we believe to be reliable but not guaranteed for accuracy or completeness. The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

The information provided does not take into account the specific objectives, financial situation or particular needs of any specific person.

Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.

Investing entails risk including the possible loss of principal and there is no assurance that the investment will provide positive performance over any period of time.

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Ellevest Team

The Ellevest team is working to help women reach their financial and professional goals.