Financial strategies for your 60s

You’ve worked hard, and retirement is here — or at least around the corner. Make the most of your wealth at this life stage by using these financial strategies.

Max out your retirement contributions

If you haven’t retired yet, you’re almost at the finish line! Make sure you're still putting enough away each month to stay on track for the retirement you desire. As of 2024, you can contribute up to $23,000 to your 401(k) plan. Since you’re older than 50, you can make an additional catch-up contribution of up to $7,500, for a total of $30,500.

You can also contribute to an IRA for you or your spouse as long as you have taxable compensation, subject to annual limits

What is the average retirement savings balance by age?

If you're already hitting these limits, there may be other products and strategies that will allow you to contribute additional amounts on a tax-deferred basis. You can also move extra savings to a taxable investment account, such as a brokerage account, which lets you buy and sell stocks, bonds, exchange-traded funds (ETFs), index funds and other investments. While such an account doesn’t offer tax benefits, it does offer much more flexibility than tax-advantaged accounts.

Plan for health care

What's the biggest worry of pre-retirees and retirees alike? The cost of health care and long-term care. And it's no wonder because health care will likely represent one of your largest expenses in retirement.

Most people think they'll simply rely on Medicare in retirement. However, Medicare doesn't kick in until age 65 for most people, so some will need a plan for health care before they're eligible for Medicare.

Once eligible for Medicare, you'll want to make sure you enroll in time to avoid any penalties for late enrollment. Keep in mind, there’s a lot of expenses that Parts A and B don’t cover, such as deductibles, copays, prescription drugs and long-term care. There are additional insurance options you can consider to help pay for these costs, but you’ll need to have a plan to cover them.

Plan for your paycheck in retirement

You've worked hard to save for retirement. Now make sure your savings will last you through your retirement years by mapping out your "paycheck" in retirement.

One of the key decisions you'll need to make is when to claim Social Security. You'll receive your full benefit at your full retirement age, which is typically between 66 and 67, depending on when you were born. You can claim your benefits as early as age 62; however, if you claim before your full retirement age, your benefits could be permanently reduced by as much as 30%. Alternatively, you can delay claiming until age 70. If you do, your benefit may be increased by as much as 32%.

In addition to Social Security, you'll want to consider other income sources you have, such as pensions, part-time employment or rental property income. Depending on your situation, it may also make sense to purchase an annuity with a lifetime income benefit to provide some income protection throughout your retirement.

The remainder of your income will need to come from your investment portfolio. But you'll want to make sure the amount you're withdrawing is sustainable so you don't run out of money. As a general rule of thumb, a 4% withdrawal rate is a good starting point for someone retiring in their mid-60s, even if you increase the amount you withdraw by 3% each year to account for inflation. However, you may want to adjust that withdrawal rate if you start retirement earlier or later, your retirement spending isn't very flexible, you rely on your investment portfolio for most of your income, or you want to leave a legacy.

Your financial advisor can help you understand the impact of your Social Security claiming decision and develop a paycheck strategy to meet your specific needs.

Pressure test your retirement strategy

While you can't predict the future, you can prepare for it. One of the ways to do that is to pressure test your retirement strategy for any unexpected events that could derail it.

Living longer than expected, needing long-term care, a market downturn in your early retirement years — these are just a few scenarios you should prepare for. There are also different ways you can protect what you've worked for in retirement, from creating an emergency fund to incorporating insurance into your strategy.

Your Edward Jones financial advisor can help you assess the impact these risks could have on your retirement plans and assist you with devising strategies to mitigate them.

Consider consolidating your retirement accounts

Have you opened multiple retirement accounts over the years? It might be beneficial to consolidate these assets with one provider, which may make it easier to manage investments, streamline your paperwork and potentially even reduce fees. Plus, your beneficiaries will only have to keep track of accounts at one provider when they inherit your assets.

IRAs at different providers can be consolidated at any time, and there are no tax consequences or tax-reporting requirements when the assets are transferred directly between your providers.

When you retire, your 401(k) can typically be consolidated to an IRA through a rollover. Some 401(k) plans will also allow you to do a rollover while still working. There are no tax consequences when you roll over your 401(k) as long as you meet certain criteria, but you will have to report the transaction on your taxes. There are also some important differences between an employer plan and an IRA that you should consider before rolling over.

An Edward Jones financial advisor can help you decide whether a rollover makes sense for you.

Reposition your assets to create a more balanced portfolio

You’ve spent years investing so you can retire on your terms. But as retirement nears, the purpose of your portfolio will begin to change. It no longer has to get you to retirement; it has to get you through retirement.

As you shift from saving to spending, a more balanced mix between equities and fixed income is generally appropriate. Growth still matters, since inflation doesn’t retire, but you’ll also need investments designed to provide for your current income needs and give you more stability. This shift should begin to occur in the years leading up to retirement.

The types of equities and fixed-income investments you own may also change. For example, you may want the majority of your stock portfolio invested in larger, higher-quality, dividend-paying companies and stocks with the potential to increase their dividends over time to help provide rising income.

As you enter retirement, you'll want to keep in mind the purpose of your investments as you make investment decisions. Different investments have different roles in providing for your retirement income. Some are designed to provide income now, and others provide income later, but they’re all important. Viewing your investments by their purpose may help you better navigate the ups and downs of the market and stick with your strategy over time.

Designate a trusted contact

Identify a trusted contact whom your financial advisor can reach if your advisor is worried that you may be subject to financial fraud or exploitation or experiencing diminished capacity. This should be someone (a family member, neighbor, friend, etc.) whom you can rely on and trust, but this person would not be given account information or have the power to make decisions for you.

Review your estate plan

You’ve secured your own financial future, but what about the situations your heirs will encounter after your death? If you haven’t already made an estate plan with a legal professional, now is a good time. If you already have one, it’s important to conduct regular reviews to make sure it’s still aligned with your wishes, especially after life changes such as marriage or divorce. When planning your estate, consider:

  • Your will, which outlines how you want your estate to be handled upon your death.
  • Your incapacity documents, which would include designating a financial power of attorney and health care power of attorney, as well as completing a health care directive.
  • Your trust (if applicable), which allows you to designate a trustee to oversee the use of an asset on behalf of a beneficiary.
  • Your life insurance options to ensure you have a strategy in place to cover your family's expenses if something happens to you.
  • Your beneficiary designations on your retirement accounts and life insurance policies as well as any Transfers or Payables on Death (TOD and POD) you may have on other accounts and property.

If leaving a financial legacy is important to you, you'll also want to review whether you are on track to meet your legacy goal. 

How Edward Jones can help

If you’re interested in learning more about how Edward Jones can help you create an effective strategy for achieving your financial goals, reach out to an Edward Jones financial advisor today for a no-obligation consultation.

Meagan Dow

Meagan Dow is a Senior Strategist on the Client Needs Research team at Edward Jones. The Client Needs Research team develops and communicates advice and guidance for client needs, including retirement, education, preparing for the unexpected and leaving a legacy. Meagan has nearly 15 years of financial services and investment experience. She is a contributor to the Edward Jones Perspective newsletter and has been quoted in various publications.

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Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate-planning attorney or qualified tax advisor regarding your situation.