5 Key Steps for Building Wealth in Your 60s
Updated: Sep 4, 2021
Building wealth in your 60s is a different ballgame than in earlier stages of your life. That’s because now there are pressures to start withdrawing and using your retirement funds.
For many people, age 60 and up is when you start to seriously eat into your wealth, but it doesn’t have to be that way. You can fully enjoy your retirement while continuing to build wealth as you age.
In this article, we will look at how building wealth in your 60s is different from when you were younger. We will see that building wealth even while beginning to enjoy your retirement is more than possible.
Before we jump in, I encourage you to review the previous articles in this series:
Building wealth in each decade of your life is based upon the steps taken in previous years. However, if you’re starting from scratch, I suggest you review the steps from your 20s and begin to take those actions. This will include doing things like:
Building an emergency fund
Eliminating bad debt, like credit cards
Cutting down on expenses and living within your means
Investing as much of your income as you can.
It’s never too late to start making all of those moves. However, if you had been building a large nest egg throughout your life, you will be most prepared for this new stage of building wealth in your 60s.
The median net worth from ages 60 through 64 is $224,775, and for ages 65 through 69, it’s $209,575. This may seem like a lot, but it’s likely not enough to fund your retirement.
In order to make the most of your 60s, here are five key steps you should take with your finances.
1. Delay Social Security
Social Security is going to be an important part of building wealth in your 60s. After all, the average monthly Social Security benefit is $1,503 – a significant amount of money.
It may be tempting to start collecting Social Security payments as soon as you’re eligible (at age 62). However, it pays to wait, because the longer you wait, the larger your benefit will be. This is true up to age 70. So if it’s possible, delay taking your Social Security benefits until you’re 70 – then you’ll find yourself gaining the most benefit from your distribution.
You’re eligible to earn Social Security if you’ve been working and paying taxes for 10 years or longer, and the amount your benefit will be is based on your highest 35 years of earnings.
Most likely, $1,503 per month is not going to be enough income to fund your entire retirement. Plus, there’s always the chance that the Social Security system will run out of money or be eliminated. With that being said, consider your Social Security benefit to be only part of your retirement income.
2. Make the Most of Medicare and Your Health
Healthcare is going to be your biggest expense in retirement. In fact, healthcare may cost you $295,000 or more in retirement, which is why enrolling in Medicare once you become eligible is important.
Navigating Medicare is a bit tricky, as there are different parts of the plan that cover different aspects of your healthcare, such as primary care, hospital stays, and medication.
In addition, Medicare doesn’t cover long-term care. Therefore, you’ll have to find a way to pay for nursing home costs or other long-term expenses you accrue in your golden years.
So first and foremost, take good care of your health – as you should throughout your life. This is especially true in the era of COVID-19, but it’s also a good idea in normal times.
You’ll want to be able to enjoy your retirement even as you’re still building wealth in your 60s. Therefore, you need to be taking good care of both your body and your mind so that you can truly make the most of your golden years.
3. Keep Your Retirement Accounts Invested Through Your 60s
Throughout most of your life, the thought of taking money out of your retirement accounts should make you shrink back in horror. After all, the whole purpose of investing for your retirement is taking advantage of compound gains. You should still do this for as many years as possible following your retirement. To see the power of compounding returns, check out this free investment calculator.
With that being said, there comes a time when you will be forced to start withdrawing money from your retirement accounts. However, that time shouldn’t come until you’re around 72 years old.
In the meantime, unless you absolutely need the money to live on, keep the money in your retirement accounts fully invested – which is still the best way to keep building wealth in your 60s.
Now, you may want to reallocate your portfolios so that you have less risk and more of your money invested in bonds and cash equivalents. While this is the traditional strategy, there are other ways to do it.
4. Stick With Stocks for Building Wealth
Traditional wisdom states that by the time you reach your 60s, you’ll want most of your portfolio invested in less-risky assets like bonds or cash equivalents. However, if you’re serious about building wealth in your 60s, I argue that this old-fashioned and outdated advice is now nonsense.
Let’s say someone retires at 60 and lives until 90 – that’s 30 years of retirement. That money will need to last the entire time. While stocks aren’t the only potentially lucrative investment, there are fewer great options these days.
Government bonds are barely paying above bank savings rates. Even high-grade corporate bonds may earn you only a 2% return right now.
Gold, on the other hand, has performed well since the Great Recession, and it can indeed be a good safe-haven for someone looking for a stock alternative.
However, stocks are still the best bet for the majority of your capital when building wealth in your 60s. Yes, you may take some short-term hits, but you’ll have the best chance of earning enough in returns to carry you through your retirement (and leave a legacy behind).
5. Live a Rich Life
Hopefully you’ve spent your life building wealth, so that by your 60s you’re merely coasting. Even if you’re playing catch-up at this time, you need to remember that life, and even wealth, is about more than just money.
Financial freedom is the ability to live the life you want without having to worry about money. Even if you still have some money concerns, it isn’t too soon to be living the life you want.
That can involve a number of different lifestyle choices. It is different for everyone. Maybe you’re still dreaming of starting a business you never got around to launching earlier in your career.
Or, perhaps you'd rather spend your golden years enjoying lavish vacations and reading the Greek and Latin classics on beaches across the world.
Whatever your dream retirement looks like, it’s important to remember to take the time, and take action, in order to truly live the life you want. Don’t wait until it’s too late!
Building wealth in your 60s means both preserving what you have in your retirement accounts as much as possible, and continuing to invest your money for growth and income.
In the final article in this series, the best practices for the money you still have invested in stocks will be explained.
Living a rich life is possible for you, however, continuing to grow your money remains a key to living the remainder of your life exactly as you envision. So, as you live your life fully, make sure to keep building wealth in your 60s.
Make sure to read the concluding article next in this series: 5 Key Steps for Building Wealth in Your 70s