The Final Countdown: Retirement Planning Decisions That Matter in Your 60s

If you've spent decades building your career, providing for your family, and making tough financial choices when they were necessary, then retirement might seem like a sweet promise of rest and relaxation. And now it's on the horizon. Your sixties are a beautiful decade when you may be preparing to leave the professional world for good, ushering in some of the best years of your life.

Retirement planning might not be over for you yet, but you can see the finish line. It's closer than it's ever been before. It's normal to feel both excitement and some level of anxiety during this time. After all, your professional life might be a huge part of your identity. Furthermore, it's common to worry about whether you've saved enough or done enough to prepare, even if you've been thorough in your retirement planning. Here's what to know about planning for retirement in your sixties.

Determining your retirement readiness

One of the important numbers to determine is how much you'll need to not only live each month, but to live comfortably and provide yourself enough breathing room to enjoy yourself. This involves honestly assessing your current financial obligations, in addition to figuring out if there are areas where you'd want to downsize. Some of the areas to examine are:

Housing

Even if you own your home outright, remember to factor in expenses such as property taxes and maintenance. While your home might be your sanctuary, remember that some days of homeownership aren't exactly as relaxing as others. This is why it's important to have enough to cover unexpected maintenance and repairs.

Healthcare

Health is wealth, which is why planning for unexpected healthcare expenses not covered by Medicare is one of the most important financial decisions that you'll make in retirement. If you have a Health Savings Account (HSA), this can be a resource to cover those expenses, but be sure to analyze whether or not you'd be financially secure in an unexpected medical event.

Quality of life

Ensure that you have enough to not only cover groceries, utilities, and living expenses, but enough to do so comfortably so that you don't diminish your current quality of life. When we're creating a budget for the future, we sometimes get into a bare minimum mindset. If you're passionate about cooking, your grocery expenses might be a bit higher than your peers’. Create your budget in a way that supports the quality of life you wish to experience in your golden years.

The little things

Beyond your necessary living expenses, will you have enough money left over for the things you love? If you're a golf enthusiast, will you be able to afford your monthly club membership? Will you be able to surprise your grandchild with a cash gift at their graduation party? Be sure to plan beyond your basic living expenses, and consider the creature comforts that make your life special.

Planning your withdrawal strategy

Once you know how much you'll need to live comfortably each month, make a plan for how you're going to withdraw this money from your various retirement accounts. There are two popular strategies.

The 4% rule

The first withdrawal strategy is the 4% rule, which advises you to withdraw 4% of your retirement savings in your first year of retirement, and then, adjusting for inflation, do so again in each year following. This rule is generally considered to support a 30-year retirement. There are two important aspects of the 4% rule to keep in mind:

• If you expect to be retired for more than 30 years, you may need to withdraw a smaller percentage to preserve your savings.

• If you have guaranteed income from a pension, you may be able to safely withdraw slightly more each year.

The bucket strategy

An alternative approach is the bucket strategy, which is where you put your money in three different "buckets," i.e. classifications of savings and investment products.

• Bucket One — This represents a few years of life supported by cash savings, such as what's in a high-yield savings account

• Bucket Two — Nearly a decade's worth of living expenses represented by funds in low-risk investments, such as bonds and certificates of deposits (CDs)

• Bucket Three — Your long-term growth money goes into higher-risk, higher-potential-return investments, like the stock market

If you're not sure which system would be right for you and your financial needs, it's best to speak to a financial advisor who can help you determine the right withdrawal strategy.

Make the most of your Social Security benefits

One of the most important decisions you can make when it comes to retirement planning in your sixties is determining when to claim Social Security. While you have the option to access this money at 62, every year you wait increases your monthly benefit. If you claim Social Security before what's known as the Full Retirement Age (FRA), it can reduce your monthly benefit by about 25% to 30%.

FRA is different depending on when you were born. For those born between 1943 and 1954, FRA is 66. That number gradually increases from 66 to 67 for those born from 1954 to 1959. FRA is set at 67 for everyone born 1960 or later.

Ideally, you want to wait a few years extra beyond your FRA. If you can hold off on claiming Social Security until the age of 70, you'll enjoy roughly an 8% increase in benefits per year of delay past FRA. (It's important to note that when you claim Social Security has no bearing on your Medicare benefits, which kick in at 65 regardless of when you were born.)

Not only does waiting until the age of 70 to claim Social Security benefits maximize the amount you'll receive, but it can also maximize spousal survivor benefits, which can be important if you were the primary earner in your household. While not everyone is able to hold off on claiming Social Security benefits, it's worth waiting as long as you can to claim the maximum amount available to you. Ultimately, when you claim is based on your financial needs and the current state of your health.

The changing definition of what it means to be "retired"

A lot of people think of retirement as a reward — a relaxing sunset after years of hard work. Some retirees prefer a life where they still keep busy with some professional endeavors, regardless of whether or not they need the income. More and more people in their sixties are opting to instead remain semi-working, pursuing passion projects, adjunct lecturing at a business school, or working as a part-time consultant. When planning your retirement finances, though, it's wise to base your budget on guaranteed or planned income sources instead of potential earnings that may not materialize.

Ultimately, your plans for retirement might change over this decade of your life. You might realize that you would like to stay in the workforce for several more years than you'd initially anticipated. Retirement goals look different for everyone. In fact, they can look different for the same person throughout the different seasons of their life.

If you’re looking for guidance as you prepare for your golden years, Fruition can help you find clarity in your retirement planning. A 20-minute or 50-minute one-on-one session with a Mentor can address your specific concerns and help you chart a clear path toward financial freedom in your retirement.