The Countdown to Retirement: Essential Steps to Take in Your 50s and Early 60s

Retirement may still seem far off, but the decisions you make in your 50s and early 60s can play a huge role in setting yourself up for financial success. Now is the time to refine your strategy and make sure you’re on the right path. At BGM, we work with clients every day to help them make the right decisions during this important stage of life. Here are some essential steps to take in your 50s and early 60s to help ensure you’re ready for a fulfilling, financially secure retirement.

1. Take a Step Back and Assess Your Financial Situation

Before you start making any big changes, take a moment to understand where you stand financially.

• Review Your Accounts: Look at your investment accounts, savings, and employer-sponsored retirement plans. Are you on track to meet your long-term retirement goals?
• Cut Back on Expenses: Can you reduce unnecessary spending to allocate more funds toward retirement? Every bit helps!
• Pay Down Debt: High-interest debt can hold you back from building your nest egg. Paying it off now will help you set yourself up for a smoother retirement.
• Reassess Your Investments: As retirement gets closer, you might want to shift your investment strategy toward more conservative options. But don’t forget that you still need some growth to outpace inflation.

2. Define Your Retirement Goals

The next step is to get crystal clear on what retirement will look like for you. When we work with you, this step helps guide the strategy we create together.

Here are a few questions to help you define your goals:

• When do you want to retire?
• What will your lifestyle in retirement look like?
• Where do you want to live during retirement?
• How do you want to spend your time in retirement?

By answering these questions, we can help you design a personalized retirement plan tailored to your goals.

3. Utilize Smart Retirement Strategies

Even if you’ve been saving for retirement, there are still strategies you can use in your 50s and early 60s to boost your savings and set yourself up for success.

Take Advantage of Catch-Up Contributions: Once you turn 50, you can contribute more to your retirement accounts than you could before. This is known as “catch-up contributions,” and it’s a great way to increase your retirement savings in the years before you retire. Thanks to the SECURE 2.0 Act, there are new opportunities to maximize these contributions—let’s talk about how you can take full advantage of this!

Review and Adjust Your Portfolio Allocation: As you approach retirement, it’s essential to ensure your portfolio matches your risk tolerance and future needs. Are you too exposed to market volatility, or do you have enough growth to keep up with inflation? We’ll help you review your portfolio and make adjustments if necessary.

Consider Long-Term Care Insurance: Long-term care insurance might not be something you’re thinking about right now, but it’s something to consider as you get closer to retirement. Buying coverage in your 50s is usually more affordable and helps ensure you have options if the need for care arises later in life. We can help you understand if this is a good fit for your plan.

Maximize Your Health Savings Account (HSA): If you have a high-deductible health plan, an HSA is a powerful tool for covering future medical expenses. HSAs have triple tax benefits—your contributions are tax-deductible, your funds grow tax-free, and withdrawals for qualified medical expenses are also tax-free. Plus, you can reimburse yourself for medical expenses later, letting the account grow even more over time.

Estate Planning: Estate planning is often overlooked but essential. It helps ensure that your assets are passed on according to your wishes. Key components of estate planning include:

• Will: This document dictates how your assets are distributed.
• Healthcare Directive: This outlines your medical care preferences in case you can’t communicate them.
• Power of Attorney: This designates someone to manage your financial matters if you’re unable to.

We can connect you with estate planning professionals to make sure your plan aligns with your retirement goals.

4. Understanding Social Security Benefits

Social Security can make up a significant portion of your retirement income, but it’s important to know when to claim.

While you can start taking benefits at age 62, waiting until 70 can lead to significantly higher monthly payments.

The timing of your Social Security benefits depends on your personal financial picture, and we can help you determine the best strategy for claiming.

5. Tax Planning for Retirement

Taxes can have a major impact on your retirement income, so it’s important to plan. Here are a few strategies to consider:

• Roth Conversions: Converting traditional retirement accounts to a Roth IRA allows you to avoid taxes on withdrawals in retirement. This can be especially helpful if you expect to be in a higher tax bracket later in life.
• State Tax Considerations: Some states have better tax policies for retirees. If you’re thinking about relocating in retirement, we can help you understand how state taxes will affect your income.
• Charitable Giving Strategies: If you plan to donate to charity during retirement, strategies like qualified charitable distributions (QCDs) or donor-advised funds (DAFs) can reduce your tax burden while allowing you to give back.

Final Thoughts

Your 50s and early 60s are a crucial time for refining your retirement strategy. By reviewing your financial situation, setting clear goals, and utilizing smart strategies, you’ll be well on your way to a secure and enjoyable retirement.

At BGM, we’re here to guide you through every step of this process. Whether you’re looking to reassess your investment portfolio, create a tax-efficient retirement plan, or get the most out of your Social Security benefits, we’ve got your back. Planning now means you can enjoy the next chapter of your life with confidence.

If you have any questions or want to discuss your retirement strategy, don’t hesitate to reach out. We’re here to help!

The opinion of the author is subject to change without notice and must be considered in conjunction with relevant regulation, as well as subsequent changes in the marketplace. Any information from outside resources has been deemed to be reliable but has not necessarily been verified. Each individual has unique circumstances to which this information may or may not be relevant. Under no circumstances will this information constitute an offer to buy or sell and it does not indicate strategy suitability for any particular investor.