Updated: Feb 16
With folks living longer and the advance of medical technology as well as improved self care, 60 may be the new 40. This means you could have 30 more years to live and enjoy time with friends and family. If you are in your 60’s and planning to retire or change jobs, here are six tips to prepare for your Go-Go Years.
1. Review your Insurance Coverages
Your goals and priorities will probably change as you edge closer to retirement. Along with them, your insurance needs may change too. Consider the following issues.
Life Insurance --- Can you reduce the value now that you are wealthy? Or, will you need it to pay estate taxes?
Health Insurance -- Sign up for Medicare at age 65 and decide on a supplemental plan.
Umbrella Liability Insurance -- Should you increase coverage to protect your nest egg?
Disability Insurance -- Can you drop your disability insurance when you stop working or change jobs?
Long Term Care Insurance -- Review your coverage levels, including inflation protection and waiting periods.
While you are reviewing insurance policies, review your beneficiaries to make sure they are up to date and consistent with your estate plan.
2. Develop a Strategy to Maximize Social Security Benefits
By waiting until you are 70, you could wind up with 40% more monthly income than if you draw benefits starting at age 62. Have questions about social security? Review our F.A.Q. on Social Security. Then talk to your financial advisor about whether you can bridge the gap between when you stop working (or switch careers) and waiting until age 70.
3. Review your Investment Asset Allocation
Asset allocation is the mix of stocks, bonds, real estate, cash and sub asset classes such as international, small-cap, and mid-cap stocks. Many individuals are invested in target date retirement funds that reduce risk across time. However, with bond yields ultra low today and longer life expectancy, these target date funds may be too conservative for some investors. This is especially true for investors who have pension, social security, or rental property income during retirement.
4. Diversify Concentrated Stock
A single stock from an ESOP or publicly traded company may have made you wealthy. But if 60 or 80% of your net worth is in one firm, this is a great time to sell some of that concentrated stock and move your assets to a more diversified portfolio. A more diversified portfolio can help preserve your wealth and provide for sustainable retirement income withdrawals for decades to come.
5. Organize Your Accounts and Streamline Your Financial Picture
Many wealthy individuals have brokerage accounts, 401k accounts, 403b accounts, SEP IRAs, IRAs, Roth IRAs, and other investment accounts. You may have old accounts at different employers. I’ve actually had a client call me up and say, "I received a statement in the mail with $80,000 I forgot I had at a former employer".
Your financial advisor can help you blend your accounts together in a tax neutral manner. This will simplify record keeping and make it easier to track beneficiary designations. Fewer accounts will reduce the amount of time you spend checking for fraudulent activity.
6. Create Your Retirement Income Strategy
Whether you have $5 million, $10 million, $20 million, or more put away, it is a good idea to have a plan for aligning your retirement expenses with your nest egg assets.
For some folks, this means using social security to pay property taxes and health insurance, while using IRA withdrawals to fund household expenses. They might use growth from a brokerage account to fund activities such as family vacations and gifts to grandchildren. For others, this may mean using steady income from the family business to fund lifestyle expenses, but letting trust funds compound and grow for the next generation.
Aligning your needs, wants and desires with your income sources can bring you peace of mind.
Bonus tip: If it has been more than 5 years, review your estate plan. If your wealth has grown dramatically, you may need to bulletproof your wealth to protect it for the next generation.
If you are 60 or over, have $2 million or more in investments, and think you may need assistance with any of the areas above, the Peak Wealth Planning team can assist.
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About the Author
Peter Newman is a Chartered Financial Advisor (CFA) and president of Peak Wealth Planning. He works with individuals nationwide that have accumulated wealth through company stock, ESOP shares, real estate, or running a business. Peter applies his unique background to help clients achieve their specific goals and enjoy peace of mind.
Peak Wealth Planning provides concierge services to meet your wealth management needs. Services include: financial planning, investment management, esop diversification, retirement income, insurance, and estate planning advice. Peak Wealth Planning is a fee-based financial advisor based in Champaign, Illinois, and Fraser, Colorado.