There are many natural milestones we reach as we go through life, everything from graduating high school and college, making major career decisions, getting married, and having kids. But as you draw closer to retirement and start to get up in years, milestones require some forethought and planning. We’ve looked at some critical actions to take before you retire as well as what to do when you reach age 65, but what about after that? Are there any decisions left to make? Here are some things to consider as you get closer to your big 70th birthday.
Start Taking Your RMDs
If you own any tax-qualified retirement accounts, 70½ is the number to keep in mind. This age is when you are required to start taking minimum distributions from your accounts. If you neglect to take your RMDs, you will be served a hefty 50% penalty! For example, if your first required minimum distribution equals $3,000 and you don’t withdraw it, you’ll lose out on $1500. That’s a lot of money to lose at this pivotal stage of life.
Your required minimum distributions depend on your account balance and your life expectancy factor, which is provided by the IRS. Retirement accounts including Traditional IRAs, SEP and SIMPLE IRAs, and 401(k)s are subject to required minimum distributions.
If you are older than 70 and a half and you forgot to take your RMDs, you’ll want to act quickly. You can fill out an IRS form and file a letter to ask that the penalties be waived. Finally, if your financial situation is such that you don’t need the money to cover expenses, you could reinvest the money or donate it to charity.
Claim Social Security
While you can start claiming Social Security as early as age 62, 70 is the magic number when your benefits will have reached their maximum monthly payment. If you have yet to tap into your benefits, it is important to remember to complete your application for Social Security benefits three months before the month in which you want your retirement benefits to begin.
Review Your Asset Allocation
As you get older, your portfolio should get less risky. You’ve had decades to accumulate and grow your money, and now it’s time to preserve and protect your wealth so it can last the rest of your life. In other words, now is not the time to take gambles and throw your money at trendy or risky stocks in hopes of generating a substantial return. A financial professional can review your investments to make sure they are appropriate for your time horizon and risk tolerance.
Plan Your Retirement
You may think that retirement is the time to be spontaneous and schedule-free, but when you go from working full-time to not working at all it can be a shock to your system. Saying goodbye to your career, your colleagues, and your routines can cause anxiety and depression. But if you plan ahead to fill your time with activities that will fulfill you, you can avoid the negative emotions that can come with this life transition. A BMO study on retirement planning reveals that retirees who stayed busy and active, pursued independence, and volunteered their time were satisfied with their life.(1)
So, enjoy your free time, but also make a list of things you want to do, places you want to go, and people you want to spend time with, then strategically map out the details so your goals become a reality.
Determine Your Work Plans
If you don’t want to quit working, you don’t have to. If you love working and want to keep bringing home a paycheck, look at your options and decided what is best for you situation. You could continue working a traditional full-time job and benefit from regular paychecks and health coverage, or you could pursue part-time work or self-employment. Once you’ve reached Full Retirement Age (FRA), you can keep earning money without reducing your Social Security payments. Also, if you have your retirement savings in a 401(k), you do not have to take RMDs as long as you are still working for the company who sponsors your retirement account.
What Are Your Plans?
Have you thought through these five steps to take before you reach age 70½? It’s critical that you take them seriously so you can maximize your money and feel confident in your plans. No one wants to reach the end of their career and feel panic or regret. Feel free to contact me today to learn about the specifics of the types of decisions you need to make when you turn 70½. Download your free retirement readiness kit and email me at firstname.lastname@example.org or call (304) 626-3900.
John is the founder and owner of Beacon Wealth Management. He specializes in helping entrepreneurs, professional practitioners and retiree redzoners overcome the major financial challenges facing affluent families.
As a trusted and friendly financial partner, John delivers a collaborative client experience that empowers and guides people to reach a greater purpose for their wealth and pursue their financial dreams. He understands the multifaceted set of financial worries people face as they become more successful and get within the retirement redzone.
John is well-regarded throughout the business community for his expertise. He has appeared as an expert guest on the “Brian Tracy Show” and “Hollywood live with Jack Canfield”, is the co-author of the book, Masters of Success with Brian Tracy, is the host of the WDTV News 5 segment, “Solutions 4 Financial Independence,” and has conducted hundreds of educational events on Retirement and Investment Advisory, Tax Reduction and Wealth Transfer Planning. These include many Universities, Federal Employee Organizations, Professional Associations and Large Energy Companies throughout the eastern United States.
With more than two decades of experience, John is credentialed as a Certified Wealth Strategist (CWS), Accredited Investment Fiduciary (AIF), Certified Estate Planner (CEP), Chartered Federal Employee Benefits Consultant (ChFEBC), Professional Plan Consultant (PPC) and Registered Financial Consultant (RFC). He is also a past multi-year member of Ed Slott’s Master Elite IRA Study Group.
A native of Weston, West Virginia, John served in the United States Air Force prior to becoming a Wealth Advisor. Today, he resides with his family in Clarksburg, West Virginia. He and his wife, Lisa, have been married since 2005 and have three amazing children. A family-oriented man, he is passionate about giving back to his community, coaching youth sports, landscaping, architectural design and playing racquetball.