In this segment from Motley Fool Answers, Alison Southwick and Robert Brokamp break down a proper investing and retirement strategy by decade. It's your 60s, and retirement has hopefully made its arrival. As a result, you'll need two completely new sets of financial strategies for the different stages of this decade -- pre-retirement and post-retirement.
A full transcript follows the video.
This podcast was recorded on April 18, 2017.
Alison Southwick: Your 60s are an exciting time. These are the years where you transition out of being a workaday Joe and it gives you time to, you know what? Get to know you again. Again! You and your neighbors try to get a Troggs cover band together and end up playing Friday nights at the country club. Not bad! So what should be your top money priorities in your 60s?
Robert Brokamp: So we're thinking, here, in terms of the early 60s. Obviously it's time to get ready for retirement. What that means is really learning a lot about Social Security and Medicare, because these are two programs that are going to have a big influence on the quality of your retirement.
Number two is to learn how to turn your portfolio into an income-generating machine. Up until now you've been spending decades learning how to accumulate money, but it's a little different in terms of using a portfolio to generate income. It might be the first time in your life that you've ever actually looked at bonds, for example. So learn about how to make your portfolio generate income.
Number three, I would also say it might be time to visit a fee-only financial planner. You might have had a financial planner all along, but if you never have, this is such an important transition with so many moving parts. It's time to get a good, qualified second opinion on when you actually can retire. And you want to get someone who provides holistic advice. A lot of people who call themselves financial advisors just really provide advice about your portfolio, but don't really know that much about Social Security, Medicare, and things like that. You want to get a good, fee-only, comprehensive financial planner.
Southwick: How much should you have saved for retirement in your 60s?
Brokamp: By age 60 you want to be shooting for eight to 10 times your household income.
Southwick: And what's a good mistake to avoid?
Brokamp: Retiring too soon. A lot of people retire just because, for example, they're eligible for Social Security at age 62. They think, "Well, I can take it now. Why shouldn't I retire?" But that doesn't mean that really all their finances are ready for retirement.
We're all aware that many of the studies indicate most people aren't prepared, but if you look at what people can do to improve their chances of having a secure retirement, it basically means retiring closer to age 70. It's more years of contributing to your accounts. More years of them growing without you touching them and years of maximizing Social Security by putting it off to age 70. If you think of everyone retiring at age 70 in this country, the vast majority of people are actually pretty prepared for retirement.