Key Points
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At 60, you may be nearing retirement.
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Make sure your savings are in a good place and learn what you need to about Social Security.
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Starting looking at long-term care insurance if you haven’t done so already.
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By the time you turn 60, it’s time to get serious about finalizing retirement plans. That doesn’t mean you’re ready to stop working or even slow down this minute. But it means that the end of your career may be getting closer, and that it’s time to make sure you’re in a good place to retire when you want or need to. To that end, here are three things you should be doing now.
1. Assessing your savings
Hopefully, you’ve been saving for retirement for a good number of years. But have you saved enough to maintain the lifestyle you want once your career wraps up? That’s the big question.
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At 60, it’s a good idea to see how much annual income you might get from your retirement savings and whether that number aligns with your spending needs. The first place to start is checking your IRA or 401(k) balance. From there, land on a withdrawal rate you’re comfortable with and do the math.
For example, if you have $1.5 million in your IRA and want to use the popular 4% rule to manage your savings, that allows you to withdraw $60,000 a year plus inflation adjustments. You can compare that figure to your estimated spending to see if it suffices. If it doesn’t, you’ll know to spend the tail end of your career trying to save a bit more.
Of course, there’s also Social Security to factor into your retirement income, which is why the next move on this list is crucial.
2. Reading up on Social Security
Social Security ideally won’t be your only income source in retirement. But those monthly benefits could play a big role in helping you keep up with your expenses. It’s important to understand how Social Security works and figure out an optimal time to claim benefits yourself.
In a nutshell, you can sign up for Social Security at any age once you turn 62. If you want your benefits without a reduction, you’ll have to wait until full retirement age to arrive. And if you’re 60 now, that age is 67.
Waiting beyond full retirement age to claim Social Security may be something worth considering as well. Each year you hold off, until you turn 70, gives your benefits a permanent 8% boost. If, after assessing your savings, you find that you’re not so happy with the number, you can plan to delay Social Security if that helps get the math to a better place.
3. Looking into long-term care insurance
Long-term care may not be on your radar just yet. But it’s an important thing to plan for.
One big misconception about long-term care is that Medicare will pick up the tab. It won’t.
What Medicare will typically do is cover the cost of skilled nursing should you need help recovering from surgery or an injury. But if you end up needing assistance with everyday living tasks as you age, like bathing, cooking, and doing other things around the house, Medicare won’t pay.
The cost of long-term care could be astronomical, which is why you need a plan to pay for it. That plan doesn’t have to center on long-term care insurance. If you have a large amount of savings, you could opt to “self-insure,” which basically means paying for long-term care yourself.
But having insurance could make the cost of long-term care a lot more manageable. So if you haven’t shopped for coverage yet, aim to do so as soon as you can.
The younger you are when you look for long-term care insurance, and the better the state of your health, the more likely you are to snag affordable premiums. Wait too long, and a policy could cost you a bundle.
You may not be ready to take the leap into retirement at 60. But it’s important to know where you stand savings-wise, have a solid plan for Social Security, and research long-term care costs and insurance. Taking these steps now could help you feel more confident as your actual retirement date gets closer, even if it’s still a ways off.
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