Are you nearing retirement age but dread the thought of having to live on a limited income? You’re not alone. Millions of Americans face the same challenge each year. However, there are ways to retire efficiently at age 60 – and enjoy your golden years without worrying about money. Follow these simple tips, and you’ll be able to relax and enjoy your retirement years worry-free.
- How Much Do I Need To Retire At 60?
- How Do I Withdraw From My Retirement Accounts Efficiently?
- How Much Retirement Income Can I Receive At 60?
- How Much Do I Need To Retire At 60 Calculator
- What Are The Best Retirement Options For Someone Age 60?
- Can I Retire At 60?
- How To Retire At 60 Comfortably
- Things To Plan For When Retiring At 60
- Safely Investing Your Retirement Savings
- Plan For Long-Term Care
- Protecting Your Loved Ones
- Next Steps
- Frequently Asked Questions
- Related Reading
- Request A Quote
How Much Do I Need To Retire At 60?
This is a great question and does not have a simple answer. It depends on your lifestyle and how much money you want to have to come in every month. However, a good rule of thumb is to try and generate at least 75% of your current pre-retirement income.
How Do I Withdraw From My Retirement Accounts Efficiently?
The best way to withdraw from your retirement accounts is to gradually maintain the account’s value while earning interest.
You have two years until you are eligible to begin collecting social security benefits at 62, and once you’re eligible, these benefits will only replace about 40% of your pre-retirement income. This is why many people look into annuities to supplement their retirement income.
Annuities with lifetime income riders automate this withdrawal process and, in most cases, provide more monthly income than most financial advisors suggest withdrawing on your own. In addition, some annuities allow your retirement income to increase to hedge against inflation.
Annuity Benefits
- Annuities guarantee an income for the rest of your life, even after the account spends down to zero.
- Some annuities can increase your “retirement paycheck” to keep up or surpass the inflation rate.
- Deferred annuities with lifetime income riders offer the ability to earn interest while collecting income.
- Any balances left over from deferred annuities will pass down to beneficiaries in a lump sum at the time of the owner’s death.
Once you turn age 62, you are eligible to collect Social Security Income. Layering both annuity and Social Security income together can create a well-rounded monthly retirement paycheck.
Annuity Basics
Understanding Lifetime Income Riders
How Much Retirement Income Can I Receive At 60?
The following table will estimate how much annual guaranteed income a 62-year-old can receive from a $1,000,000 annuity with a guaranteed lifetime withdrawal benefit, now or in the future. This table does not include Social Security Benefits.
| Current Age | Income At 62 |
|---|---|
| 40 | $133,884 |
| 45 | $121,263 |
| 50 | $109,832 |
| 55 | $83,668 |
| 60 | $61,000 |
How Much Do I Need To Retire At 60 Calculator
Find out how much retirement income you can generate starting at age 60 for the rest of your life.
What Are The Best Retirement Options For Someone Age 60?
When you retire at 60, you have a few options regarding your retirement accounts. You can leave your money in the account, roll it over into an IRA, or convert it to a Roth IRA.
First, rolling your 401k over into an IRA gives you more control over your money and how it’s invested. You’ll also be able to take distributions from your account without a penalty. Another viable option is rolling the 401(k) into an IRA annuity.
Additionally, converting your 401k to a Roth IRA is another option, but it should be carefully considered. With a Roth IRA, you’ll pay taxes on the money you convert now, but all future distributions will be tax-free. So this can be a good option if you think your tax rate will be higher in retirement than it is now.
Can I Retire At 60?
The short answer is: maybe. It depends on a few factors, such as how much money you have saved up and your retirement goals. If you’re looking to retire comfortably and still have a good lifestyle, you’ll need to save some money. Experts typically recommend having at least $500,000 saved up before you retire.
Of course, everyone’s retirement goals are different. Some people are content with a more modest lifestyle, while others want to continue living the lifestyle they did before they retired. So it all depends on your circumstances.
How To Retire At 60 Comfortably
If you want to retire at 60, you must have a plan. Just like with anything else in life, if you want to achieve something, you need to have a plan and put that plan into action. The first step is figuring out how much money you’ll need to save to live comfortably.
This can be difficult to answer because everyone’s definition of “comfortable” differs. However, a good rule of thumb is to have at least enough saved to cover your basic living expenses for at least five years. This will ensure you have a cushion in case anything unexpected arises.
Once you know how much money you’ll need to save, you can start working on a retirement plan. There are a few different options when it comes to retirement plans, but the three most popular are 401(k)s, IRAs, and annuities.
Things To Plan For When Retiring At 60
When you’re planning for retirement, there are a few things you need to take into consideration.
The first is determining how much monthly income you need to cover your basic living expenses. This includes your mortgage, rent, food, utilities, transportation, and healthcare. Inflation is another factor you need to account for, as your costs will likely increase over time.
Next, consider how much income you’ll need to cover additional expenses. This could include travel, entertainment, hobbies, or anything else that brings joy to your life.
Finally, you need to make sure you have enough saved up to cover any unexpected costs that may arise. This could include medical bills, home repairs, or anything else that comes up unexpectedly.
Safely Investing Your Retirement Savings
Now that we’ve put a plan in place to replace your pre-retirement income, the next step is to plan for additional funds used for investing.
Our rule of thumb is if you can’t afford to lose money, you shouldn’t be in a position to lose money. This is where fixed index annuities come into play.
Fixed index annuities provide the potential to earn interest based on the performance of an underlying market index (S&P 500, Dow Jones, Nasdaq), but with a 0% floor, which means your account can never go down, no matter how low the market goes.
With a fixed index annuity, you have the potential to earn interest while your money is still safely invested and not subject to market volatility.
Plan For Long-Term Care
No one likes to think about needing long-term care, but it’s an essential part of retirement planning. Unfortunately, long-term care can be expensive, and if you don’t have the right coverage in place, it could deplete your retirement savings.
There are a few different plans for long-term care costs. One option is to purchase a long-term care insurance policy. This will ensure you have the funds to cover any long-term care costs.
Another option is to purchase a life insurance policy or annuity with a long-term care rider. This rider provides benefits that can be used to cover the cost of long-term care. In most cases, the benefits paid out will not be taxable.
The best way to plan for long-term care costs is to purchase a long-term care annuity or a life insurance policy with a long-term care rider because it cuts the cost of a nursing home, assisted living, or home health care down to a fraction of the actual cost. Also, remember that this isn’t “use or lose it” insurance (think auto insurance), which means you can recoup some of the money back or pass it down to beneficiaries.
For example, one long-term care annuity will triple your investment to pay for your LTC expenses in the future. $50,000 investment = $150,000 of long-term care benefits (tax-free)
Protecting Your Loved Ones
Once you have a plan to replace your income and cover long-term care costs, the next step is to protect your loved ones.
Life Insurance
One way to do this is to purchase life insurance. Life insurance can provide peace of mind knowing that your loved ones will be taken care of financially if something happens to you.
A Trust
Another way to protect your loved ones is to create trust. A trust can help you manage your assets and ensure they are distributed according to your wishes.
A trust can also help you avoid probate, a legal process that can be time-consuming and expensive.
Annuities With An Enhanced Death Benefit
Finally, consider an annuity with an enhanced death benefit rider. This rider provides a death benefit more significant than the account value of the annuity. In most cases, the death benefit will cover most of the tax burden to your beneficiaries.
For example, one deferred annuity currently offers a 30% bonus on the annuity’s total value at the time of your death, which will pay most, if not all, of your beneficiary’s taxes.
Next Steps
Although retirement may seem like a daunting task, it’s not impossible. Proper planning and preparation allow you to enjoy your golden years without worrying about money. Don’t hesitate to contact us if you’re nearing retirement age and want some help getting started. Our team of experts will work with you to create a plan that fits your needs and helps you retire efficiently. Thanks for reading!
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Frequently Asked Questions
How much money is needed to retire at age 60?
The answer to this question depends on several factors, including your lifestyle and how much income you need to maintain your current standard of living. However, as a general rule of thumb, you will need about 75% of your pre-retirement income to cover your expenses in retirement.
Can I retire at 60 and get Social Security?
Yes, you can retire at 60. However, you must wait until age 62 (unless disabled) to collect your Social Security benefits. Still, your benefits will be reduced if you start receiving them before your full retirement age, which is 66. On the other hand, you will receive a higher monthly benefit if you wait until your full retirement age to collect benefits.
Where should I invest my money at age 60?
The answer to this question depends on your goals and risk tolerance. However, as a general rule of thumb, you shouldn’t be exposed to market volatility if you can’t afford to lose money. We recommend fixed index annuities in these circumstances.
How many times is the salary to retire at 60?
Many publications say you need at least a few million dollars to retire at 60. The truth is you will need about 75% of your pre-retirement income to cover your expenses in retirement. Using annuities to save for retirement will allow you to achieve this at a fraction of the cost if there is plenty of time to plan before age 60.
For example, if a 40-year-old person purchases a $746,913 annuity with a lifetime income rider and wants to retire in 20 years at age 60, that person would receive roughly $100,000 annually for the rest of their life, guaranteed.