Easing into the Golden Years- the 60’s and Beyond

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I think there’s a misconception that once you hit 60 (and beyond) it’s time to kick back, put your feet up, grab a beer and relax. That’s not always the case.

For most people, their 60’s are a time where they experience a tremendous amount of change which takes some getting used to.

At this point in their lives, most Americans are nearing full retirement age after having worked the majority of their adult lives. Many of the daily routines that they’ve grown accustom to are about to change, big time.

Out with the old, in with the new

Their kids are probably all grown up and out of the house, the mortgage is paid off (or nearly paid off) and pretty soon you won’t have to crawl out of bed, slap the alarm clock and head off to work any longer.

Yes my friend, it’s time to start preparing to cross over and make the leap from pre-retirement to bonified retiree. If you’ve planned for retirement most of your working life, then transitioning into retirement starting in your 60’s should be relatively smooth.

Ideally, you have accumulated enough capital through a combination of employee benefits plans and personal investments to produce enough income to live comfortably. Hopefully, over the years, you’ve also developed a few hobbies and other interests to challenge yourself during this exciting new phase of your life.

But before easing into the golden years, I’d like to make a few suggestions:

• always take time to stop and smell the flowers:)
• give yourself the gift of a full financial checkup. You need to take stock of what you have, prioritize what’s important and take the necessary measures to achieve those goals.

Your Retirement Plan is as unique as your fingerprint

From my perspective, people (that are not clients) always ask me questions about what EXACTLY they should be doing in retirement or in preparation for retirement. My answer is I don’t know what makes you tick, so I wouldn’t know EXACTLY what you should be doing. Please notice the emphasis on the word EXACTLY.

What I mean by this is: although there are some general guidelines, (which I will share a little further down the page) what’s important to you in retirement, may mean very little to someone else.

Some people want to make sure their children are well taken care of, others want to ‘blow it all’. (i.e Leona Helmsley cut two of her grandchildren out of her $4 billion dollar fortune but left 12 million to her dog Trouble.) Retirement goals come in many different shapes, sizes and colors.

A To Do List for Sexagenarians (those in their 60’s)

In a little bit here, I’m going to provide a list of things I’d recommend most sexagenarians focus on as they ease into retirement, but before I do that, I’d like to offer up one piece of advice for anyone in their sixties:

Go and have a formal financial plan done, if you haven’t done so already! That way both you, your loved ones and a trusted advisor (not mandatory;) know EXACTLY what you should be doing.

Let’s take a closer look at a few of the things you might find on a sexagenarians ‘TO DO’ list:

Determine your net worth- you can calculate your net worth by adding up the total value of everything you own (assets) and then subtracting the amount of debt(s) you owe (liabilities). Your assets would include your home, cars, IRA’s, bank accounts, income producing real estate, etc. Liabilities include mortgages, car loans, credit card debt, etc.

Knowing your net worth is an essential part of the retirement process and is a way to ‘take stock of what you have. ‘ Almost every goal you have is tied into your net worth.

A - Review your existing investment allocation- consider if individual investments within each asset class conform to your overall objectives now that your crossing over into the retirement zone.

Create a record keeping system- maintain records of acquisition dates and prices for your property. Be sure to keep a list of the following (in no particular order):

• family financial counselors, including financial advisors, attorneys, accountants, insurance agents, etc.
• bank and brokerage accounts, insurance policies, birth certificates, property deeds and registration.
• safe deposit boxes

It’s important that someone know where all this information is kept. A nice ancillary benefit of completing a financial plan is that it forces you to gather all this information, bring it up to date and creates a central record of it all.

Over the years, It’s happened to me 2 times where a client has died and the spouse later commented how nice it was to have all the necessary information at his (or her) fingertips, instead of having to go on a time consuming scavenger hunt.

Make sure you have prepared a will and updated your beneficiaries- this will help expedite the transfer of assets to your heirs.

Analyze your cash flow- contact the social security administration and the HR department of your employer(s) to obtain estimates of your retirement benefits. You need to know exactly how much monthly income will be flowing into your life.

Consider authorizing a power of attorney or creating a living will- In a living will, an individual can declare his or her wishes for medical treatment and procedures in the event he or she becomes unconscious or incompetent.

Review your Medicare coverage and consider the potential benefits of a Medigap policy- Medicare is made up of 2 parts: Part A is for hospitalization, Part B is for doctors’ services. Anyone over the age of 65 who is eligible for Social Security benefits will be covered by Part A at no charge.

Medicare has deductibles and co-insurance amounts for both Part A and B (much like other insurance plans) and you may want to look into purchasing additional coverage through Medigap insurance.

Consider purchasing Long Term Care insurance to provide appropriate coverage in case of periods of prolonged illness. This really is something you should have done in your 50’s, but if you haven’t and can afford it, then look into it.

Almost 40% of those over the age of 65 will be confined to a nursing home for some period of time, from my experiences this is the single biggest threat to reducing the value of the estate.

Look to reduce your estate shrinkage- if you’re married, consider utilizing a credit shelter trust in your will. This is a simple way of siphoning off a portion of your assets into a trust that won’t pass to your spouse. By doing this, you’re keeping those assets out of his (or her) future estate, reducing their future estate taxes and padding the inheritance of your beneficiaries.

If you do this, make sure that the credit shelter provisions adequately provide for the survivors’ needs. In plain English that means leaving the surviving spouse with a stream of income (from the trust) that’s enough to maintain the lifestyle that they’ve grown accustomed to.

And why don’t I end on a familiar note. Even in your 60’s and beyond, look into the feasibility of converting regular IRA’s and employer sponsored plans into a Roth IRA.

Not for the same reasons I recommend it to GenXer’s all throughout this blog, for sexagenarians it’s all about the estate planning.

Without getting in too deep here, if you’re looking for ways to reduce the value of your estate, the conversion taxes you will owe alone, will knock down your estate.

It’s a wrap

I’ve heard my parents, many times over the years, say ‘time just flies by so quickly, one day you’ll wake up and your 60 years old.’

Well when that time comes I want to make sure I’ve covered all the bases and I’m prepared for whatever life throws at me.

A big part of what should make this time in your life so enjoyable is knowing that you’ve taken care of many of the aforementioned issues, so no single event can punch a whole in your financial universe.

After you’ve done all that, it’s time to sit back, relax and enjoy your golden years with nary a care in the world…

I hope you enjoyed this article. Here are the other articles in the Money Matters for All Ages series:

• Introduction: Financial Strategies for Infants and Young Children @ My Dollar Plan
• Preschoolers: Teaching Preschoolers About Money @ I’ve Paid for This Twice Already
• Children and Pre-Teens: Personal Finance for Children and Pre-Teens @ Being Frugal
• Teenagers:
  • Teach Your Teen the Basics of Money Management @ Gather Little by Little
  • Money Advice to My Teenage Son @ DebtFREE-Revolution
• College Age: College Money Matters @ Mrs. Micah
• The Twenties:
  • Money Matters for All Ages - The 20’s @ Cash Money Life
  • Financial Advice For Your Twenties @ Remodeling This Life
• The Thirties:
  • Money Matters for All Ages - The Chaotic Thirties @ Moolanomy
  • Personal Finance Advice For Your 30’s @ My Two Dollars
• The Forties: The Forty Year Olds’ Wakeup Call
• The Fifties:
  • You’re in Your 50s - Wake Up and Start Saving @ Millionaire Money Habits
  • Retirement Objectives in your 50’s @ Credit Withdrawal
• The Sixties:
  • In your 60’s? Use your financial freedom wisely @ Rocket Finance
  • Easing into the Golden Years- the 60’s and Beyond @ Chance Favors
• Retirement:
  • Retirement in the UK @ Plonkee Money
  • 4% Withdrawal Rule for Retirement @ Quest For Four Pillars
• Wrap up and highlights: My Dollar Plan

This article is part of the Money Matters for All Ages group writing project being conducted by the M-Network and other blogging friends. See the bottom of this article for the full list of participants and links to their articles. Please check back daily, as I will update the links as new articles are posted! Also, if you are blogger and would like to join into the discussion, feel free!

This post was featured in the 137nd Carnival of Personal Finance over on The Dividend Guy. A lot of passion was applied to putting together this carnival. Kudos to the Dividend Guy for the great work.

Tags: golden years, retirement and estate planning, Roth IRA Conversion