7 Financial Goals to Hit by Age 62 So You Can Retire Comfortably
Generally, when folks hit their early 60s and feel like they're 3-5 years away from retirement, that's when they start assessing if they're truly ready.
Typically, the kids are out of the house; grandchildren might even be in the picture. They've usually achieved some major milestones in their careers. They've enjoyed a few bucket-list experiences and want to start spending more of their time doing the things they love with the people they love.
So, what does a clear path to retirement look like to a 62-year-old?
As always, Keen Wealth has a checklist!
1. Achieve a Target Savings Amount.
Specific Goal: Save 20-25X of your annual retirement withdrawal needs from your portfolio.
Why It Matters: High savers have more options to maintain their lifestyles longer and cope with market fluctuations, emergencies, and annual inflation. Hitting a large savings goal can also help retirees feel less nervous about spending their nest eggs and enjoying the retirement they've worked so hard to secure.
Action Steps:
- Maximize contributions.
Top off contributions to your 401(k) and IRAs every year, especially if you have an employer-match benefit. And once you turn 50, take advantage of catch-up contribution allowances as well.
- Pay your future self first.
Set up automatic monthly contributions to your savings and retirement account.
2. Eliminate Debt
Specific Goal: Pay down credit cards, vehicles, student loans, and mortgages.
Why It Matters: Lower debt means lower monthly expenses, giving you more money to dedicate to enjoying your lifestyle, taking trips, or preparing for long-term needs.
Action Steps:
- Create a debt reduction plan.
Go through your balance sheet with your financial advisor and figure out which debts you should pay down first, and how aggressively. While many pre-retirees focus on their homes, mortgages with a low fixed rate shouldn't be the priority for everyone.
- Avoid new debt.
At 62 or older, do you really need a new credit card? A second or third auto loan?
3. Establish an Emergency Fund
Specific Goal: Save enough in an emergency reserve account to cover at least 12 months of your expenses.
Why It Matters: Basements flood. Cars break down. People get sick. Loved ones need help.
Action Steps:
- Automate savings.
While you're setting up automatic monthly contributions into your retirement accounts, do the same for your emergency savings account if you aren’t at your goal.
- Maintain accessibility.
Your emergency funds should be in cash, in an account you can access at a moment's notice.
4. Secure Adequate Insurance
Specific Goal: Protect yourself, your spouse, and your home with a comprehensive insurance plan.
Why It Matters: Insurance is an important safeguard that protects you and your retirement assets in the event of an unexpected medical or housing issue.
Action Steps:
- Review your existing policies.
Sit down with your financial advisor and insurance agent and look for any gaps in your coverage that you should fill before retirement. If you're planning to retire before Medicare eligibility at 65, you'll also need a plan for health insurance.
- Consider long-term care insurance.
This coverage may be important if you anticipate needing to pay for assisted living or in-home nursing later in retirement.
- Shop for competitive rates.
At least once per year, compare plans from various insurance providers so that you're getting the best combination of value and coverage.
5. Update and Organize Your Estate Planning Documents
Specific Goal: Create a legal, durable, and comprehensive estate plan, including a will, living trust, power of attorney, and healthcare directives.
Why It Matters: Proper estate planning ensures that you and your assets are protected if you pass unexpectedly or become incapacitated. Your estate plan also manages how your assets will be distributed and can help minimize legal headaches and tax liability for your heirs.
Action Steps:
- Create or update your will.
Review your will annually to make sure it still reflects your wishes, especially around your executor and beneficiaries.
- Establish a trust.
If appropriate, a trust can help ensure that your heirs manage your assets responsibly. Trusts can also keep your estate out of probate.
- Organize your documents.
Create a file that includes your estate plan and other important legal documents, like your banking records and Social Security card. Make physical and digital copies for your attorney and your financial advisor. And tell your executor where they can find the originals.
6. Plan for Tax Efficiency in Retirement
Specific Goal: Lower your annual tax liability with a careful sequencing of withdrawals and investments.
Why It Matters: The less you're paying in taxes, the more net income you'll have to enjoy retirement goals or pad your savings.
Action Steps:
- Diversify.
A mixture of cash, tax-deferred (401(k)), tax-exempt (Roth IRA), and brokerage accounts gives you options for meeting your annual needs without raising your tax bill.
- Strategize withdrawals.
Your financial advisor can help you determine the most tax-efficient order for making withdrawals from your retirement accounts.
7. Build a Personal "Happiness Index" Metric
Specific Goal: Measure and track the factors that contribute to your happiness and well-being, such as health, relationships, learning, and maintaining progress towards retirement goals.
Why It Matters: Retirement is about more than money.
Action Steps:
- Identify key happiness factors.
What aspects of life are most important to you?
- Set measurable, actionable goals for each factor.
If good health is a high priority, set a goal to exercise three times every week. If you want to start tackling your travel bucket list, schedule a big vacation at the start of the year.
- Assess and Adjust
Review your happiness index at least once per quarter. Are the activities you’re tracking still bringing you joy? Are there new things you want to add to your list?
Our Personalized Planning Process
Of course, no one checklist can encompass every retirement scenario.
At Keen Wealth, once we’ve covered the basics, we build a comprehensive financial plan around each person’s unique situation, needs, and goals.
So, if you’re in that 60ish age range and you can’t tick off every one of these boxes, don’t worry. Come visit Keen Wealth and we’ll work through a year-end review of your finances that can help you plan for your retirement on your preferred timetable.
About Bill
Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.
The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.
The Amazon Best Seller ranking listed on marketing materials is specifically referring to Best Seller rankings for the Kindle Top 100 Paid Lists under the subcategories of: Budgeting and Financial Risk Management, based on data as of September 5, 2019 and the second edition under Financial Risk Management on October 26, 2022. Amazon rankings although relevant on how a product is selling overall doesn’t necessarily indicate how well an item is selling among other similar items or similar item categories. Amazon may choose the most popular categories or subcategories within which an item has a high ranking to determine its best seller rankings. These rankings are updated hourly and as a result, should be expected to fluctuate as such. Keen Wealth Advisors and Amazon are not affiliated entities.
The Steve Sanduski Advisor Network, Belay Advisor, LLC and other third-party contributors to our blogs and podcasts are not affiliated with Keen Wealth Advisors.
For additional details on Keen Wealth Advisors, please visit https://www.keenwealthadvisors.com/important-disclosures.
20241016-3945241-12495347