Turning 60 is a significant milestone that often brings thoughts of retirement and financial security to the forefront. It’s a time when many people start to seriously consider their financial future and make important decisions about the years ahead. With retirement potentially just around the corner, having a clear financial plan becomes more crucial than ever.
In this list, I’ll share a comprehensive financial checklist for those approaching or hitting the 60-year mark.
Review Your Retirement Savings
Take a close look at your retirement accounts, including RRSPs, TFSAs, and any pension plans. Calculate how much income these savings will provide during retirement. Consider if you need to increase your contributions in the final years before retirement. If you’re behind on savings, explore catch-up strategies to boost your retirement fund.
Evaluate Your Investment Portfolio
Assess your investment mix to align with your retirement timeline and risk tolerance. As you near retirement, you might need to shift to more conservative investments. Consider seeking advice from a financial advisor to optimize your portfolio. Remember to rebalance your investments regularly to maintain your desired asset allocation.
Understand Your Pension Options
If you have a workplace pension, review the details and payout options. Understand the difference between taking a lump sum versus monthly payments. Consider how your pension will work with other retirement income sources. Don’t forget to check if you have any forgotten pensions from previous employers.
Plan for Healthcare Costs
Research and estimate potential healthcare costs in retirement. Consider purchasing long-term care insurance to cover potential future needs. Look into supplemental health insurance options to cover gaps in government healthcare. Start setting aside money specifically for healthcare expenses in retirement.
Review Your Insurance Needs
Assess your life insurance needs as you approach retirement. You might need less coverage if your children are grown and financially independent. Consider converting term life insurance to permanent coverage if required. Don’t forget to review and update your disability insurance if you’re still working.
Create a Retirement Budget
Estimate your expected retirement expenses, including both essential and discretionary spending—factor in inflation and potential lifestyle changes. Consider creating a “trial” retirement budget and living on it for a few months to test its feasibility. Adjust your savings strategy if your projected expenses exceed your expected retirement income.
Develop a Social Security Strategy
Understand how your Canada Pension Plan (CPP) and Old Age Security (OAS) benefits work. Calculate your expected benefits and consider the best age to start claiming them. Remember that delaying your CPP can increase your monthly benefit. Factor these government benefits into your overall retirement income plan.
Pay Down Debt
Aim to enter retirement debt-free by paying off high-interest debts like credit cards. Consider the pros and cons of paying off your mortgage before retirement. If you have substantial debt, create a plan to reduce it significantly before you retire. Remember, entering retirement debt-free can significantly reduce your financial stress.
Update Your Estate Plan
Review and update your will to ensure it reflects your current wishes. Consider setting up powers of attorney for finances and healthcare decisions. Review your beneficiary designations on retirement accounts and insurance policies. Consider your legacy and any charitable giving you want to include in your estate plan.
Explore Part-Time Work Options
Consider whether you want to work part-time in retirement. Look into flexible job opportunities in your field or explore new areas of interest. Remember that part-time work can provide extra income and help you stay active. Consider how additional income might affect your retirement benefits and tax situation.
Assess Your Housing Situation
Evaluate whether your current home will suit your retirement needs. Consider if downsizing could free up equity and reduce expenses. Look into age-friendly housing options if you plan to move. Factor in potential home modifications costs if you age in place.
Create an Emergency Fund
Build or boost your emergency fund to cover unexpected expenses in retirement. Aim for 3-6 months of living expenses in easily accessible savings. Having an emergency fund can prevent you from dipping into retirement accounts for unexpected costs. Consider keeping this money in a high-yield savings account for better returns.
Plan for Travel and Leisure
If travel is part of your retirement plans, start budgeting for it now. Look into travel insurance options for retirees. Consider joining travel programs or clubs that offer senior discounts. Remember to factor these costs into your overall retirement budget.
Understand Tax Implications in Retirement
Familiarize yourself with how your tax situation may change in retirement. Learn about tax-efficient withdrawal strategies for your retirement accounts. Consider consulting a tax professional to optimize your retirement income strategy. Remember that proper tax planning can significantly impact your retirement income.
Evaluate Long-Term Care Options
Research long-term care options and costs in your area. Consider whether long-term care insurance makes sense for your situation. Look into government programs that might help with long-term care expenses. Discuss your preferences for future care with your family members.
Review and Update Beneficiaries
Check all your financial accounts and insurance policies to ensure beneficiary designations are current. Remember that beneficiary designations typically override what’s in your will. Consider the tax implications of your beneficiary choices on retirement accounts. Make sure your chosen beneficiaries align with your overall estate plan.
Review Your Credit Report
Get a free copy of your credit report and check for any errors. Address any issues to ensure a good credit score in retirement. A good credit score can help you secure better rates on insurance and loans. Consider freezing your credit to protect against identity theft.
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