Can you retire at 60 and make your savings last? For many people in Springfield, 60 feels like an appealing finish line. In our experience, retiring five years before becoming eligible for Medicare—and potentially a decade before claiming the maximum Social Security benefit—can create significant financial challenges that may be less of a concern for those who retire later. In our experience, here are some questions to consider with your financial advisor if you’re considering retirement at 60:
Do You Know What Your Retirement Will Actually Cost?
In our experience, retirement projections become much more useful when they are based on your life instead of a generic percentage of your current salary. Start by estimating housing, utilities, food, insurance, travel, hobbies, taxes, and other recurring expenses. Then, consider costs that may change substantially over a 20- or 30-year retirement.
Some planning benchmarks suggest having approximately 8 times your annual salary saved by age 60. In our opinion, general guidelines can provide helpful context, but they cannot determine whether you are truly ready for retirement. We understand everyone’s financial situation is different. Someone with modest expenses and multiple sources of income may need far less savings than someone planning a more expensive retirement lifestyle.
Can You Bridge the Income Gap?
Retiring at 60 introduces an interesting decision: you have left your paycheck behind, but you are not yet eligible for Social Security. Social Security benefits can generally begin at age 62, but claiming before full retirement age permanently reduces the monthly benefit. Waiting longer, potentially until age 70, may increase the monthly benefit. However, the trade-off is longevity: if you die before collecting
The first decade, then, is especially important. Your advisor can model different combinations of cash reserves, taxable investments, retirement account withdrawals, pensions, and eventual Social Security benefits to determine how each possibility could affect your portfolio over time.
What Happens to Your Healthcare at 60?
This is one of the biggest questions to answer before handing in your notice. Medicare generally does not begin until 65. If you retire at 60, you could have approximately five years of healthcare expenses to fund through options such as a spouse’s employer plan, COBRA, or individual coverage. We believe you don’t want to estimate this expense casually. Premiums, deductibles, prescriptions, and out-of-pocket costs could materially change the retirement budget you thought you had.
Could Your Plan Handle a Bad First Few Years?
We believe retirement readiness takes foresight. What if inflation remains elevated? What if markets decline shortly after you retire? What if a major home repair comes up? Drawing from investments during an early market downturn may create sequence-of-returns risk and potentially affect how long a portfolio lasts. Maintaining appropriate liquidity and developing a flexible withdrawal strategy may help you avoid that risk.
Find Out Whether 60 Works for Your Retirement—Call Us Today
We think you shouldn’t have to retire first to discover whether the math works. The advisors at LaTour Asset Management of Springfield are happy to help you evaluate income needs, Social Security timing, healthcare expenses, investments, taxes, and potential risks before you make the leap. If 60 is circled on your calendar, call our Springfield team at (877) 888-5724 to find out what your financial plan may need to make that goal possible.
Disclosures: Advisory services are offered through LaTour Asset Management, LLC, an Investment Advisor in the State of Missouri. Insurance products and services are offered through LaTour Advisory Group, LLC, an affiliated company.
All content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Nor is it intended to be a projection of current or future performance or indication of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital.
LaTour Asset Management, LLC and LaTour Advisory Group, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency.
