Planning for retirement is a journey filled with anticipation, excitement, and certainly a fair share of apprehension. At age 59, the runway to retirement becomes increasingly clearer, yet the path may be strewn with uncertainties. Experienced retirement planners Loren Merkle and Clint Huntrods, explored actionable strategies for those on the brink of this exciting transition. Here are the key takeaways to help you get prepared for a secure retirement.
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What’s on the Minds of the 59-Year-Olds?
Taking Inventory and Feeling the Pressure
When individuals reach the age of 59, many start to ask critical questions: “Do I have enough?” “When can I retire?” Similar concerns were shared by a couple who recently met with Clint. Having raised their children and seen them off to college, the focus naturally shifted to their own future. Loren highlighted that after working for over 30 years, families are understandably anxious about whether their savings will last the next 20-30 years.
Market Volatility Worries
Market volatility remains a chief concern. Many remember the staggering market drops of 2008 and more recent downturns in 2020 and 2022. Pre-retirees, understandably, are concerned that another market swing could drastically alter their retirement. However, there’s a silver lining: strategies can be deployed to mitigate these risks and help retirees stay on track for retirement no matter what is happening with the stock market.
The In-Service Rollover: A Strategy Worth Celebrating
One powerful strategy discussed for those nearing retirement is the in-service rollover. At 59 1/2, many can transfer funds from a 401(k) to an Individual Retirement Account (IRA). This move provides greater control and a broader range of investment options. Loren pointed out that you can continue benefiting from your 401(k) while enjoying a new level of investment flexibility in your IRA.
Understanding Investment Risk
Loren emphasized the importance of understanding the amount of risk your investments currently carry. Market shifts do not equally influence all portfolios. At retirement, your portfolio must be able to sustain income over potentially three decades. Therefore, a thorough assessment of how much risk is appropriate, based on your income needs, is critical. Loren stressed that continuous monitoring and adjustment of the risk level are essential to steering through market fluctuations.
Maximize Contributions with Catch-Up Contributions
The IRS allows individuals aged 50 and older to make additional “catch-up” contributions to their retirement accounts. This is a golden opportunity to boost retirement savings. For those who haven’t yet taken advantage of this by 59, it’s high time to consider it. Not only does this help increase your retirement nest egg, but it also provides immediate tax benefits.
Implementing Tax-Savvy Strategies
The conversation also delved into the realm of Roth conversions. A customized tax plan is vital to determining if this strategy fits into your financial landscape. As illustrated through the example of John and Sue, Roth conversions can lead to substantial tax savings in retirement. Whether it’s the timing of the conversion or the amount, an experienced retirement planner can help tailor these decisions to maximize financial benefits in retirement.
Conclusion
Age 59 is a pivotal time in your retirement planning journey. It’s an age ripe for taking decisive action to mitigate risks, optimize savings, and build a plan for financial stability for the golden years. A retirement planner can help you align your decisions with your retirement vision. By actively engaging in retirement planning now, you can look forward to celebrating not just your 60th birthday but many more milestones with peace of mind.
Click here to watch the full episode on how to celebrate age 59 and a half on YouTube!
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We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. The content and examples shared are for informational purposes only and should not be construed as investment advice or serve as the sole basis for making financial decisions. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal financial situation. Our firm is not permitted to offer legal advice. Investment Advisory Services offered through Elite Retirement Planning, LLC. Insurance Services offered through MRP Insurance, LLC.
