Trending
Are you nearing retirement in your sixties? As you plan for retirement, you need to pay attention to these five financial areas.
In this episode, Jeremy Keil explains how to plan for retirement in your sixties with a focus on avoiding mistakes and underestimating longevity. He goes over 5 financial areas you should focus on and emphasizes the importance of taking control of your retirement finances by making informed decisions about when to retire, when to take Social Security and pension benefits, and how much to withdraw from your retirement accounts.
Jeremy discusses:
- Estimating longevity and how to determine when you should retire
- When to take Social Security and pension payments
- How much and when you should take money out of your retirement savings accounts
- Which retirement savings accounts you should take money from first
- When to pay taxes
- And more
Planning For Retirement In Your 60s
Are you planning for retirement in your sixties? Let’s make sure you don’t trip yourself up before reaching the finish line because you only get one shot at it! In this article, we’ll discuss the 5 key areas you should be focusing on in your 60s when you plan for your retirement.
What’s The Number 1 Biggest Mistake People Make? Answer Correctly, ‘What Is My Life Expectancy?’
The number one mistake people make when planning for retirement is underestimating their longevity. It’s important to accurately assess your life expectancy using tools like LongevityIllustrator.org so you can more accurately estimate how long you will live in retirement. How long you live in retirement is a key factor in determining so many other decisions like when to take Social Security, how to take your pension, and how much you can afford to take out of your retirement accounts each year.
When Should I Take Social Security And Pension?
When planning for retirement, it’s important to make informed decisions about when to retire, and when to take Social Security and pension based on your longevity and your available retirement savings accounts. If you are married, this decision doesn’t only affect you. It affects your spouse’s retirement income too, so the decision should be made together and with their longevity in mind. You can calculate your joint longevity with LongevityIllustrator.org.
Ultimately, this decision comes down to considering the math and probabilities of retirement, rather than making assumptions based on incomplete information. Coordinating your decision when to retire with when to take Social Security and pension can help maximize your lifetime income.
How Do I Lower My Lifetime Taxes In Retirement?
Planning for taxes in retirement is crucial. You should consider the long-term tax implications of each account and take advantage of low tax years. It’s important to coordinate your tax planning with your overall retirement plan.
Being intentional about when you should pay your taxes in lower tax years can help reduce the amount of taxes you have to pay over your lifetime and increase the amount of money you can hold onto for retirement.
A common way to lower your lifetime taxes is to take advantage of Roth conversions. When you project out your lifetime tax situation you’ll likely find times that your marginal tax rate is lower than other times. You should do a Roth conversion, of the right amount, during those tax years. You are much more likely to have a lower tax rate when you are married vs. single, before you take your Social Security, before you start your Required Minimum Distributions (RMDs), and before taxes are scheduled to increase in 2026.
How Much Income Can I Take From My Retirement Accounts Each Year?
Deciding how much to take out of your retirement accounts can be tricky. This decision is affected by the decisions of when you plan to retire, when your low tax years are estimated to be, and when you should start taking your Social Security and pension payments.
It’s important to coordinate this decision with when to take Social Security and pension, as this can help maximize your lifetime income. You might have heard of the 4% rule that suggests you can take out 4% of your account each year. Following this guideline would likely encourage you to take your Social Security and pension earlier, which is likely to lower the lifetime amount of guaranteed income. Instead you may be better off taking a higher percentage from your accounts earlier in retirement, for a set amount of time, which allows you to take a lower percentage from your accounts later in life for however long you live. This concept is called the Retirement Hatchet and is a way to combine tax planning in the early years of retirement with a higher guaranteed lifetime income by waiting on Social Security.
Which Retirement Accounts Should I Take Money From First?
Deciding which accounts to pull money from first is very important. Conventional wisdom suggests using non-IRA brokerage accounts first, followed by traditional IRA accounts, and then Roth IRA accounts. However, it’s important to consider the long-term tax implications of each savings account and take advantage of low tax years. While the conventional wisdom is a good start, you can improve on your tax situation by using the up-front low tax years suggested by this strategy to convert your Traditional IRA accounts to Roth IRAs.
You can maximize your financial security and have peace of mind in your golden years by taking a proactive approach to retirement planning. Remember to accurately assess your longevity and your joint longevity if you have a spouse, make informed decisions about when to retire and when to take Social Security and pension, coordinate your tax planning with your overall retirement plan, and decide which accounts to pull money from first makes the most sense financially for you.