New Year’s Financial Resolutions for your 60s

In this series of articles, we have been suggesting New Year’s financial resolutions that may be appropriate for each stage of life. This article offers four suggestions for New Year’s financial resolutions for individuals in their 60s.


retirement resolutions for your 60s

In order to retire at age 65, you will likely need to have accumulated a sizeable retirement nest egg by the time you reach your early 60s. So this is the time to take a careful look at your portfolio and start making some projections about whether you will have enough money to stop working (and earning income) on the date you’ve targeted for retirement.

As you do so, remember that you may be eligible to receive Social Security benefits starting at age 62. And don’t forget to factor in other possible sources of retirement income, such as an employer pension plan and/or cash value from a permanent life insurance policy.

Financial Resolution #1: Start to narrow down a target retirement date. There is no official retirement age in the U.S., though 65 has often been considered a desired retirement age for many people if they have the financial resources to do so. Of course, some people choose to retire sooner than this, and some people choose to retire later.

Financial Resolution #2: Begin planning your retirement budget. One budgeting strategy is to plan on needing between 70-80 percent of your pre-retirement income during retirement. This is based on the assumption that you will no longer need to support children, you may have paid off your home mortgage, and you won’t have employment expenses like clothing, commuting, eating lunch out, etc.

However, these “savings” can easily be offset by unknown variables and additional unplanned expenses, especially if you plan to live an active retirement lifestyle. The future cost of healthcare is an especially big unknown. If you want to travel extensively, entertain and eat out frequently or participate in expensive hobbies during retirement, be sure to factor these costs into your retirement cost-of-living budget.

Also, don’t forget to factor the effects of inflation into your retirement budget. Over time, inflation erodes the value of your money and reduces your purchasing power. As a result, a dollar in ten years will likely buy you less than a dollar today. Inflation has risen at an annualized rate of around 3.7 percent a year over the past three decades, shrinking the purchasing power of $1 in 1980 to just 35 cents today.

Financial Resolution #3: Make adjustments to your asset allocation mix. As we noted in our last article offering financial resolutions for your 50s, it may be wise to begin shifting your asset allocation mix to lessen exposure to investments that may be more volatile in the short term (like equities) and increase exposure to those that generally have less volatility, such as fixed-income investments (like bonds) and cash equivalents.

The idea is to manage your savings and investments in a way that will help protect, rather than grow, your income and principal as you prepare to pass from the accumulation to the withdrawal phase of retirement planning. This is even more important once you enter your 60s.

Financial Resolution #4: Start thinking about your retirement lifestyle. Here’s a bonus resolution that really isn’t financial, but is very important at this life stage. Many people enter retirement with no idea of how they will spend their time. Start thinking now about the activities and hobbies you want to pursue when you retire.

It doesn’t really matter what they are — the important thing is that you have a plan designed to keep your mind and body active and sharp.

Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC.


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