Financial planning for women in their 60s and beyond

Content Type: Article

As you age, your needs and goals may change—and so should your finances.

There’s no such thing as a one-size-fits-all retirement plan. That said, every woman in her 60s should consider a few extra steps to plan for her post-career life.

“Historically, women have made less money than men over their working lives,” says Christine M. Ceron, Wealth Advisor at Regions Private Wealth Management in Fort Lauderdale, Florida. “That means that women need to save more than men do while they’re still working. It’s very important for women to realize that they can offset this with planning.”

Building a solid financial plan is the key to enjoying your best life in retirement. To fully reap the rewards of your decades of retirement saving, consider these steps.

Find your balance

Your financial freedom throughout your post-work years will largely be determined by the two B’s: budget and balance. To make sure that you successfully reach your retirement goals, it’s important to keep your budget balanced with an eye on longevity. This is more important than ever, as women are living longer and staying more active. In fact, the Social Security Administration calculates that a woman reaching age 65 today can expect to live, on average, another 21 years. Those are years you should be prepared for.

According to the Department of Labor, retirement experts calculate that you’ll need 70% to 90% of your preretirement income to maintain your standard of living after you stop working. “Part of your financial planning process is to do your budgeting and know your income streams and your expenses. Factor in your day-to-day living expenses and also budget for what you want to do in retirement,” says Ceron.

Consider which current expenses will remain and which will change. Will lifestyle changes like increased travel affect your budget? How will taxes, which can change in retirement, and inflation affect your finances? “You need to create a thorough budget prior to retiring, and once you’re retired, you should review your budget annually and account for any changes,” Ceron says.
Consolidate your retirement savings

It’s not unusual to switch companies as your career progresses and new opportunities arise. But if you’ve worked for more than one company throughout your career, chances are that you have multiple retirement accounts at different institutions. Now is the time to consolidate everything into one central account.

“Consolidating retirement accounts can save you money on investment fees, and it can save you time,” says Ceron. An added benefit of consolidation is that it can help you reach your financial goals. “If you have multiple accounts and different advisors on each account, this can cause you to have different allocation levels in each portfolio,” says Ceron. “You want to be sure that your investment plan is on target for your goals and objectives, and consolidating can help you achieve that.”
Address your home needs

Your home is far more than just a roof over your head. It’s an asset that factors into your financial plan for retirement. As you make your way through your list of considerations, ask yourself, “Do I still need to pay off my mortgage or make significant repairs to my home?” If the answer is yes, consider doing so with a home equity loan or line of credit while you’re still working and have more discretionary income.

“A home equity line of credit can be a good source of liquidity if you have a big expense like work on your home,” Ceron says. “Tapping into the equity in your home can come with relatively inexpensive interest rates and flexible repayment plans. But you should always talk with your advisor about how you plan to repay a home equity loan.”

Are you thinking of moving out of town? Be sure to compare the cost of living and tax rates in your ideal retirement locale with where you currently live before you make the switch. Whether it’s Social Security income, a pension, or IRA and 401(k) withdrawals, it’s important to estimate and budget for your taxable income. This is something that your financial advisor can help with.

Looking to downsize? The price between your current home and your new home could be added to your retirement fund. For example, says Ceron, “If you’re living in a five-bedroom home and you’re an empty nester, do you really want to stay in that home?” While some people might feel attached to their current home, others might prefer to downsize.

“If you decide to move, make sure to do your research,” says Ceron. “You need to know certain things about the home and the area that you may be moving into, such as property taxes and homeowners association fees. And if you don’t downsize, you need to factor in the costs of maintaining your current home.”
Evaluate your Medicare options

In planning for retirement, you also have to address your health needs. Beginning three months before you turn 65, there’s a seven-month period when you are eligible to enroll in Medicare Part A (hospital insurance) and Part B (medical insurance). “If you miss that window, you could face a penalty that increases the premium by about 10%,” says Ceron.

Familiarize yourself with what Medicare does and doesn’t cover. Long-term care, hearing aids and dental care are among the common expenses not covered, while prescription coverage requires separate enrollment in Medicare Part D. “If you’re in your early 60s, you should also talk to your advisor about possibly getting a long-term care plan as well,” says Ceron. “The older you get, the more expensive it gets, and if you don't have additional coverage, it could really put a dent in your savings and retirement plans.”
Update and organize your documents

As you prepare for retirement and determine the future of your finances, keep in mind that your financial plan shouldn’t be a mystery to your loved ones. Make sure your family and financial planning team are aware of any major changes or revisions to your accounts. Also include your will, durable power of attorney and medical power of attorney. “It’s really important that the people you’ve named in those documents actually have copies of those documents,” Ceron says.

If these documents are out of date—for instance, if you now live in a different state or your wishes have changed—update them to reflect your current circumstances. “When you’re doing your annual review with your financial advisor, it’s good to review these documents because, just like life, those documents are fluid,” Ceron says.

Having a solid financial foundation in place can ease your transition into retirement and enable you to take advantage of the time, freedom and flexibility of these empowering years ahead.