According to the TransAmerica Center for Retirement Studies, the median retirement age in the U.S. is 63, with more than half of all Americans retiring by age 65. That means you’re likely retired and enjoying the fruits of your labors by the time you reach your 70s.
However, while work and saving for retirement may no longer be a primary concern, your 70s aren’t a time to stop planning for the future. Here are some things to consider and tips for managing finances during this important decade of your life.
Organize Your Financial Records
Even if you’ve kept sound financial records all your life, it’s a good idea to double check a few things while in your 70s.
First, take time to make a list of your assets and update it regularly. You may also consider recording the names and information for key contacts, such as your financial planner, accountant, lawyer and insurance agent. It’s also a good idea to keep a list of the regular bills that you pay and how payments are made.
The idea is to make it simple for a family member or trusted resource to step in and manage your finances if a health emergency should make it necessary.
Think About Required Minimum Distributions
After years of contributing to tax-advantaged retirement plans, such as a 401(k) or IRA, the tables turn as you reach your 70s. As you approach 72, you’ll need to begin taking required minimum distributions (RMD) from these accounts. That means calculating your RMD and knowing the deadlines for taking it.
One of Uncle Sam’s biggest penalties is levied on those who fail to take their RMD on time—50% of the amount not taken. That means if you are required to take a $20,000 annual distribution, and you missed taking that distribution on time, you could owe the IRS $10,000 in penalties if you miss the deadline.
It’s also a good time to think about how those RMDs are going to impact your overall financial outlook, including the cost of paying taxes. We recommend discussing your required minimum distributions with your financial advisor to be better prepared.
Review Your Medical Coverage
When you retired, you likely signed up for Medicare. If you haven’t reviewed your coverage since then, it’s something important to consider as you enjoy your 70s. In fact, Medicare recommends that you do this yearly, prior to annual enrollment.
Plans change from year to year and you could be offered better benefits at lower cost. This is particularly true if you are enrolled in a Medicare Advantage plan through a private insurer. Comparing coverage across companies could net you a lower premium with a plan that covers more, just by doing your homework.
It’s also time to consider optimizing the use of any Healthcare Savings Account (HSA) funds you might have left over from your working years. One tax-saving strategy is to use HSA funds to pay for Medicare premiums. To help you use your HSA to its best advantage, we’ve assembled some HSA guidance and tips.
Think About Charitable Contributions
You’ve probably already given thought to how you want your wealth distributed between family members after your passing, but have you thought about giving back and continuing to support the causes that are important to you? Getting started can be as easy as establishing a personal gifting mission.
In doing so, you’ll research nonprofits and find those that align to the causes you care about. Then decide how much you want to give and how often. Once you’ve identified your gifting mission, your financial advisor can help you establish a plan for making it happen.
For more information on making charitable gifting a part of your personal legacy, read our tips on the topic.
Protecting Wealth During Your 70s
While most of your life has been spent earning and saving, your 70s are a time for enjoying the wealth you’ve accumulated. It’s also a time for planning and guarding your financial health to ensure you can continue to live the lifestyle to which you are accustomed.
Taking a few important steps during this decade will help you to realize the many goals you’ve set for your retirement, and FNBO is here to offer support and guidance. For more financial management tips while in your 70s, visit FNBO’s financial journey page for more guidance and to receive a personalized assessment of your current finances.