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Retirement Planning By The Decade- Your 60s

You are now in the home stretch, almost at the finishing line to retirement. If you had been planning for retirement most of your working life, the transition into retirement starting in your 60s should be relatively smooth. Hopefully, you had started your retirement planning in the previous decade and accumulated enough capital to provide sufficient income for you to live comfortably and enjoy retirement.

Your 60s is the time to prepare for the changes retirement will bring, most importantly the financial changes that will occur. Instead of earning a pay cheque, check you will now create that paycheck pay cheque for yourself. If you have not been saving this decade, now really is the last opportunity to put aside retirement dollars, so all is not lost. Your financial position could be better than you think. You may have no major expenses, such as mortgage, children expenses, or even if you do, they will soon be behind you.

Perhaps you even have an inheritance and no other dependents. You therefore have funds you can begin to invest to create your retirement income.

It can be overwhelming to realize that you are not financially prepared for retirement when it looms around the corner. Put your worries aside and begin to take action now, focusing on the time you have left. To build or increase your retirement saving during this decade, you will want to take into consideration the following:

Working longer. Bearing in mind that individuals are now living longer, you and or your spouse can expect to live up to 30 years after retirement. You want your retirement income to last as long as you and hence early retirement will not be an option for you. The longer you remain employed, the more funds you will be able to accumulate and the fewer years you will have to worry about funding your retirement lifestyle. If you are unable to continue working full time, you can consider part time employment.

Decide on your retirement lifestyle. You can no longer put this off, as the lifestyle you and your spouse decide on will drive the amount of income you will require on retirement. Calculate what your dream retirement will cost and review your investments to determine if you can afford that dream and if not, how can you fill the gap.

Maximize your savings and Investment potential. If you are comfortable in taking risk, it may benefit you to look at investments that are generally considered risky but on which the returns will be higher.

Discuss your portfolio with your investment adviser, bearing in mind that you can lose money as well. Use this strategy wisely, not recklessly.

Once again, if you are not saving the maximum in your company sponsored superannuation fund or a retirement scheme begin to do so now. If you are not participating in any of these retirement vehicles, then start right away, setting aside the maximum allowed. This you can continue to do throughout the remaining years of your working life.

Invest wisely: Even as you attempt to maximize your investment earnings, make sure you are taking advantage first of tax deferred investment such as retirement schemes and non -taxed investment options.

Eliminate debt and manage expenses. You don’t want to enter into retirement with lots of debts as that reduces the amount available to allow you to live your retirement as you had envisioned. In addition, unless you have significantly reduced your debts and are now actively managing your expenses you will find yourself with fewer less funds available for investment in your retirement funds. As you move towards retirement and the possibility of losing your payc chequeheck, you will be better off practicing practising from now to live on less.

Sticking to a budget will allow you to get the most out of your income now; with the up side being practice and you will be perfect on retirement.

You may even want to consider downsizing your living accommodation, allowing you to take out the equity in your home and relocating to more budget- friendly accommodation.

Healthcare checkup. You can do without a surprise health care crisis when you retire, especially if you no longer have health coverage. If during your working years your or your employer were or yourself was making contributions to the National Insurance Scheme, you will be able to enroll as a member under the government health scheme, NI GOLD.

Also available are health care and prescription drug benefits under the National Health Fund and JADEP. This however may not be sufficient to fully take care of your medical expenses. You can avoid those expenses by beginning to take care of your health. Setting aside funds to cover this type of expenditure is also another means of ensuring you can take care of this without withdrawing from your retirement savings.

Always keep in mind that retirement decisions last a lifetime. You therefore need to make sure that every decision you make regarding your retirement, whether financial or otherwise, is carefully thought out, and made only after ensuring that you have all the facts you need to do so.

As you move forward toward retirement, guided by your vision of the lifestyle you would like to have at that time, remember it is important that you continue to be guided by your checklist, which should include the following:

Review and update your retirement plan: You may decide to enter retirement when you are in your 60s or wait another decade to do so.

Your decision will be determined by your retirement plan: the vision for your lifestyle and the funding available to allow you to achieve this vision. Revisit your plan – do you still want to achieve this lifestyle? Is your saving sufficient to allow you to do? If not, what do you need to do now?

Develop your income plan:

Create or review your withdrawal strategy that will be used to provide you with an income in retirement. Even if you are a few years away from retirement, this information can be critical in helping you to determine if you are ready to retire. In developing your income plan you will need to determine what your living expenses will cost, as well as, expenses to cover the activities you will undertake during retirement.

You will need to determine how you will access these funds, whether you will purchase annuities which can provide a guaranteed income or access only the interest earned on investment, while preserving your capital. In arriving at your income don’t forget to take into all sources of income that will be available to you on retirement including your state benefits.

Continue saving: It never ends! You still have time to maximize your retirement savings and you need to continue to make the most of every opportunity to do so. Don’t ever make the mistake of thinking that the benefit you will obtain from saving in your Company’s superannuation fund or a retirement scheme will be sufficient to fund your lifestyle on retirement. Continue to explore additional saving options. Maintain your emergency and health fund as well as other designated saving accounts, topping up whenever possible.

Debt assessment and expense control: Remember, as you move toward a fixed income, there will be a limit as to the value of the expenses this income can cover. You will need this income to cover essential living expenses and debt should not be one such expense. Before you retire, it is recommended that you eliminate or significantly reduce your debts to manageable level based on the income you will have during retirement. This needs to be high on your list of activities to complete before you retire. Life is full of uncertainties. I, as in your 60s, ; you are closer to the end of the planning stage and hence will not have the luxury to recover from reduction in income in later years. Always keep in mind that you need to be frugal to ensure that your income lasts throughout your lifetime.

Revisit your Investment asset allocation: Asset allocation needs to be undertaken with a different mind set from the previous decades. Your investment should be so structured to take into account the fact that you are transitioning into retirement. While you will still be focussed on capital growth, your optimal asset allocation may change as you now begin to take into consideration your income plan and withdrawal strategy.

Emphasis will be on protecting your savings, while guarding against purchasing power risk, inflation risk and longevity risk. It is important that you continue to seek professional advice to ensure you are maximizing your opportunities and your investments are on track to meet your retirement goals.

Create your retirement budget: As you move to a fixed income pay chequecheck, it becomes critical that you are spending your funds wisely. You may have fewer financial responsibilities on retirement, but you will always have to be financially responsible for yourself and your spouse., You have to manage this fund. You will need to include in your budget living expenses, health expenses, and retirement activities. Budgeting will assist you to prioritize and address your expenses in an affordable manner, while maintaining the kind of lifestyle you want to have.

Update your estate plan: During this decade it is important, more than ever, as you move into retirement to ensure that you have all your finances and financial documents in order. Retirement brings with it unique challenges as well as opportunities and it helps to be prepared. Take time to update your will or set up a trust.

Make sure that appropriate updated beneficiary designations are on insurance policies and your superannuation fund or retirement scheme accounts, as these will take precedence over a will. Decide if you will need a durable power of attorney created for your finances and health care and appoint someone you know you can trust to make the appropriate decisions on your behalf if you are not able to do so. Make sure important documents are properly stored and easily accessible when family members need to have access to them. Ensure that your estate plan is prepared in such a manner that it will minimize the tax payable on death or transfer of assets.

Ensure that you are safeguarding your financial future: Be prepared for the unexpected. Revisit the insurance coverage you had taken out in previous years and ensure that they are sufficient to protect your assets and your family. Begin to look at how you will deal with issues such as Health care and illness that may require hospitalization or prolonged care. Look at the various insurance products available that can be used to fund these expenses.

Continue to practice practise your retirement plan: Begin the transition towards retirement, start to cut back on the number of hours spent at work and begin to participate in the activities you want to do when you retire. Educate yourself on the opportunities that lie ahead and mentally begin to prepare yourself to take advantage of them.

Continue to seek Professional Advice: This is your most valuable resource. As you get ready to implement your retirement plan, your Financial Advisor, Legal Advisor and Retirement Consultant, amongst others, will continue to have a role to play in ensuring you achieve your objectives.

Continue to stay on track. You are almost there. As you get ready to reap the rewards of your hard work it is important that you complete the final stage of your planning and get to the end of the track. Do not undertake activities that will increase your debt portfolio or reduce your capital as you will automatically be reducing the income available to you. Your 60s are a time when you need to ensure that you have the savings necessary to provide for the cash flow you will need in retirement. Now is not the time for risks; play it safe; stay on track.

While financial planning is an important part of your overall retirement planning, preparing for retirement is so much more encompassing.

As you move into your 70s and beyond, take time beforehand to assess your readiness for retirement, taking into consideration habits and attitudes, particularly as it relates to social support and health care. Plan wisely and you should be able to live comfortably throughout your retirement years. You have earned it

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