Your 60s are a pivotal time in life. During your 60s, you may be wrapping up your career and getting ready to kick-start the retirement of your dreams.
But be careful — the wrong investing decisions could hurt your plans to retire on time and leave you cash-strapped later in life. Here are three big mistakes it pays to avoid.
1. Unloading all of your stocks
You may have been told that stocks are a dangerous bet right before and during retirement, because they can be very volatile. But while it is a good idea to shift some of your investments to bonds when retirement is right around the corner, dumping your stocks completely is a bad move.
You still need stocks in your retirement portfolio to continue generating solid returns — returns that buy you more leeway to take generous withdrawals from your savings. In fact, it's actually a smart idea to hold on to dividend stocks during retirement, because they could not only grow in value, but also provide you with an additional income stream to enjoy.
So, how much of your portfolio should you have invested in stocks? If you're in your 60s, you should plan on leaving about 50% of your portfolio in stocks unless you happen to have a very limited appetite for risk. If that's the case, you can reduce that percentage, but make sure to keep some stocks on hand.
2. Not continuing to invest
You might assume that you no longer have to put money into your retirement plan during your 60s, since you're right on the cusp of that milestone. But actually, pausing your IRA or 401(k) contributions is a mistake.
Even though your money won't have a ton of time to grow, if you're still collecting a paycheck, it makes sense to pad your savings if you can afford to. The more money you have in those retirement savings accounts, the more options you'll have to continue investing and generating wealth for your senior years.
Plus, you'll get to enjoy the tax breaks that come with funding an IRA or 401(k).
3. Putting too much money into cryptocurrency
Many investors are jumping on the cryptocurrency bandwagon these days, and to be clear, there is the potential to make money by investing in digital coins. But as risky as stocks may be for near retirees, cryptocurrency is even more of a risk. And while you may want to invest a small amount of money in it, going big on crypto could be disastrous if you're about to bring your career to a close.
In fact, a good rule of thumb when investing in cryptocurrency is to only put money into digital coins that you can afford to lose. This means that you absolutely shouldn't pull a chunk of cash out of your IRA or 401(k) and put it into crypto instead.
Your 60s are the time to gear up for retirement, close out your career, and prepare for some very exciting life changes. Do your part to avoid these investing mistakes so you can kick off retirement in a good place financially and avoid money-related stress throughout your senior years.
The $16,728 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $16,728 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we're all after. Simply click here to discover how to learn more about these strategies.
The Motley Fool has a disclosure policy.