Entering your 60s is a fun time. You’re likely facing retirement, and looking forward to enjoying life a bit more. However, it’s easy to derail your plans by being guilty of certain money mistakes. Here are 12 missteps you want to avoid in planning during your golden years.
Selling When the Stock Market is Down
Selling when the stock market is never desirable. It’s worse when you’re approaching, or in retirement. You’re typically no longer able to earn an income in your 60s.
This locks in your losses with no means to replace it. Having access to different pots of cash may be a better solution if you need quick money.
Withdrawing Social Security Too Early
You want your Social Security income as soon as possible, which is currently at 62. However, the earlier you take it you permanently reduce your benefit.
If possible, look to delay it as much as possible. Reports show you can increase your benefit by eight percent for every year you delay. Putting it off even a couple of years directly gives you a raise.
Not Signing Up for Medicare on Time
Delaying Social Security can be smart, not Medicare. You have a seven-month window that starts three months before you turn 65.
If you miss enrolling, you can pay at least a ten percent penalty on your monthly premium – for the rest of your life. Don’t make that mistake.
Being Too Aggressive or Conservative With Your Investments
If you’ve not met with a financial advisor, now is the time. You want to be careful with risk, but not too careful that you don’t outpace inflation.
Think of your 60s as the red zone in football. It’s wise to be smart, and you don’t want a turnover.
Not Having a Long-Term Care Plan
You may not realize this, but Medicare doesn’t cover long-term care. This includes nursing homes and assisted living facilities. Furthermore, many health insurance companies don’t cover it either.
Now is the time to start planning for your long-term care needs, if you haven’t done so already. Healthcare costs tend to spike during retirement years. Saving and planning now can help ease the burden later in life.
Taking on Consumer Debt
High-interest consumer debt is never good. It’s worse during your 60s as you may not be able to earn additional income.
Live within a budget and avoid overspending. If you do have credit card debt, consider a balance transfer card that allows you to lower the interest rate temporarily to zero percent to knock it down quicker.
Overspending on Your Children or Grandchildren
There are no loans for retirement. Spending on your loved ones brings joy, but it must be done wisely.
The last thing you want is to be burdensome to your children or grandchildren as you age. You can still buy them gifts, but do it within a budget.
Not Managing Finances With Your Spouse
If you have a partner, it’s more vital than ever to be on the same page financially. One of you will pass before the other and the last thing you want is to leave them holding the bag or not know how to manage the finances on their own.
Speak often, and work together to ensure both parties know how to manage your finances.
Retiring Too Soon
Early retirement is a dream for many. It takes lots of planning and an ample amount of cash.
You can’t withdraw money from your 401(k) or IRA before 59.5 years of age without facing a penalty of at least ten percent. That’s not to mention taxes. The last thing you want is to outlive your assets.
Not Maxing Out Your Retirement Accounts
If possible, you want to max out all of your available retirement accounts. This builds up your assets and gives them more time to grow.
People over 50 have the ability to make catch-up contributions to both your 401(k) plan, IRAs, and more. If you can, take full advantage of this.
Not Growing Your Emergency Fund
Life is full of the unexpected, even during retirement. You want to have at least six months worth of living expenses saved in your emergency fund.
It’s best to aim for at least 12 months of living expenses. You never know how much cash you’ll need in retirement, and it’s best to be over prepared.
Look for a high yield savings account, like CIT Bank that pays a super competitive rate and is FDIC-insured to earn as much as possible on your savings.
Taxes are never fun. You don’t want them to bite you in your 60s, and later. This impacts where to contribute cash, to distributions.
If in doubt, speak with a financial advisor to get assistance to establish a thought out plan.
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