As we journey through life, reaching certain financial milestones can help ensure a comfortable and secure retirement. While everyone’s financial path is unique, there are some key goals that can significantly improve your financial well-being as you approach your 70s. Achieving these milestones can provide peace of mind and financial stability in your later years.
In this blog, I’ll outline 13 important financial milestones to aim for before you turn 70.
Maximize Retirement Account Contributions
By age 70, you should aim to have maximized your retirement account contributions. This includes taking full advantage of catch-up contributions in your 50s and 60s. Maximizing these contributions can significantly boost your retirement savings. If you haven’t been able to contribute the maximum in earlier years, focus on increasing your contributions as much as possible in your later working years.
Pay Off All High-Interest Debt
Entering your 70s debt-free, especially free of high-interest debt, should be a priority. Focus on paying off credit card balances, personal loans, and any other high-interest debts. Being debt-free in retirement reduces financial stress and allows you to use your retirement income for living expenses and enjoyment rather than debt repayment. If you’re struggling with debt, consider consulting a financial advisor for strategies to become debt-free.
Have a Fully Funded Emergency Fund
Aim to have a fully funded emergency fund by age 70. This fund should cover 3-6 months of living expenses. An emergency fund is crucial in retirement to cover unexpected costs without dipping into your retirement savings. Keep this money in an easily accessible account, like a high-yield savings account, to ensure you can get to it quickly when needed.
Create a Retirement Budget
Develop a detailed retirement budget well before you turn 70. This budget should account for all expected expenses in retirement, including healthcare costs. A clear budget helps you understand how much income you’ll need in retirement and can guide your saving and investment strategies. Review and adjust this budget regularly as your circumstances and expenses change.
Develop a Pension Strategy
By 70, you should have a clear strategy for claiming your pension benefits. The latest you can delay claiming benefits is age 70, at which point you’ll receive the maximum possible benefit. Understand how different claiming ages affect your benefit amount and how these pensions fit into your overall retirement income plan. Consider factors like your health, other sources of income, and life expectancy when deciding when to claim.
Have a Long-Term Care Plan
Develop a plan for potential long-term care needs before turning 70. This might involve purchasing long-term care insurance, setting aside savings specifically for care needs, or researching care options in your area. Long-term care can be extremely expensive, so having a plan in place can protect your assets and ensure you receive the care you need. Discuss your options with a financial advisor or insurance specialist to find the best approach for your situation.
Update Your Estate Plan
Ensure your estate plan is complete and up-to-date by age 70. This includes having a will, power of attorney, and healthcare directive in place. An updated estate plan ensures your assets are distributed according to your wishes and can help avoid family conflicts after you’re gone. Review your estate plan regularly and make updates as your circumstances change.
Achieve a Debt-Free Home
Aim to have your mortgage paid off by 70. Owning your home outright reduces your monthly expenses in retirement and provides financial security. If paying off your mortgage isn’t feasible, consider downsizing to a more affordable home. Being mortgage-free in retirement can significantly reduce your required retirement income and provide more financial flexibility.
Diversify Your Investment Portfolio
By 70, your investment portfolio should be well-diversified and aligned with your risk tolerance and retirement goals. This might mean shifting to a more conservative asset allocation to protect your wealth. However, maintain some growth investments to help your portfolio keep pace with inflation. Regular reviews and rebalancing of your portfolio are crucial to ensure it continues to meet your needs.
Establish Multiple Income Streams
Work towards establishing multiple income streams before 70. This could include rental income, dividends from investments, part-time work, or income from a small business. Having diverse income sources in retirement can provide financial stability and help your savings last longer. It also offers protection if one income source is reduced or eliminated.
Develop a Withdrawal Strategy
Create a clear strategy for withdrawing from your retirement accounts by age 70. This strategy should consider tax implications, required minimum distributions, and how to make your savings last throughout retirement. A well-planned withdrawal strategy can help minimize taxes and ensure you don’t outlive your savings. Consider working with a financial advisor to develop a strategy tailored to your specific situation.
Build a Legacy Plan
By 70, consider developing a plan for the legacy you want to leave. This might involve setting up trusts for grandchildren, planning charitable donations, or establishing a family foundation. A legacy plan allows you to have a lasting positive impact and can provide tax benefits. Discuss your goals with your family and a financial advisor to create a plan that aligns with your values and financial situation.
Conduct a Comprehensive Insurance Review
By age 70, conduct a thorough review of all your insurance policies. This includes health, life, home, and auto insurance. Assess whether your coverage is still appropriate for your current life stage and make necessary adjustments. You may find that you need less life insurance but more comprehensive health coverage.
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