Retirement is so close that you can almost taste it, and your working life is soon to be behind you. But, as you get closer to your golden years you’re going to want to avoid making any financial mistakes. You’ve got to be a little more careful with your money than when you were younger, as it would be a mistake to take any risks this close to retirement. Here are 6 money mistakes that you should avoid in your 60s.
1. Aggressive Investing
Yes, you might be feeling like time is running out to grow your nest egg, but aggressive investing isn’t a safe option. In fact, it poses as more of a risk than a reward. One mistake and you could see years’ worth of savings slipping down the drain.
Instead of using this investing tactic, switch to a balanced investment strategy that holds no more than 60% in stocks. Place the remaining amount or an even larger portion into safer bonds and fixed-income assets. You might argue that by using these schemes you’ll see less of a return, and you’d be right. But time isn’t on your side, and at the end of the day, you need to pick stability instead of chance.
As a general ruling, to work out how much of your investments you should keep in stocks and bonds is the 120-rule. Subtract your current age from 120, and the number you are left with is the stock percentage you should use. If you are 69-years old, 51% of your investment portfolio should be stocks, with the remainder in safer avenues.
2. Miscalculating Monthly Expenses
Sometimes when calculating their livings costs, a common trap those in their 60s can fall into is forgetting about their employee benefits. While still in the world of work, your employer pays a portion of your health care premiums, life insurance, and other benefits. At the time of employment, your health care premiums and 401(k) contributions are tax-free. But things change when you retire unless you have a Roth account.
Once you retire, you might get hit with tax payments and higher monthly healthcare rates that you didn’t properly plan for. Additionally, every time you withdraw from your 401(k) or IRA you’ll pay tax. And, depending on which state you live in your Social Security and pension could be at the liberty of the tax man too.
Before you leave work, it’s worth contacting your company’s HR department to see if there is any kind of retirement planning workshop that you can go to. If not, get in touch with a retirement planner to get a realistic figure of what your monthly expenses will now be.