Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Rescue Your Retirement In 3 Steps -- Even At 60

Less than a quarter of Americans older than 55 has at least $250,000 in savings and investments. That's right -- 22%, according to the Employment Benefits Research Institute.

Does that scare you? It should.

Chances are, according to these statistics, if you are in your 60s, your retirement plan isn't on track.

So, what can you do?

Actually, you have some options.

First, you need to play catch up, saving as much as you can.

In 2013, it's possible to set aside $17,500 in a 401(k) and $5,500 in an IRA. Since you are at least 50, you can make a catch-up contribution of $5,500 for a 401(k) and a $1,000 catch-up contribution for an IRA.

If you are a business owner, you can contribute even more to a SIMPLE IRA (up to $12,000 with a catch-up limit of $14,500) or a SEP IRA (up to $51,000) for 2013. For those who have the resources, now is the time to save up as much as possible.

The nice thing about playing catch up is you can save in a tax-advantaged retirement account, and if you max out your tax-advantaged accounts, you can use taxable accounts to reach your retirement goals.

Second, decide when you will begin taking Social Security.

You can start taking Social Security at age 62; however, this is not considered "full" retirement age. For most of those in their 60s, full retirement age is 66. However, the longer you wait, the greater your monthly income.

If you are having difficulty with your income, it might make sense to begin taking Social Security benefits when you can. Even though you'll have smaller monthly benefits, you'll at least have some income, and you can leave more of your investment nest egg to grow, rather than withdrawing quite as much right now.

For those with larger nest eggs, it makes sense to draw down your tax-advantaged accounts now, reducing their size and waiting to begin taking Social Security benefits. Unless you have a Roth IRA, you will be required to take minimum withdrawals from your tax-advantaged accounts when you reach 70½. Since your required minimum distributions will be based on the size of your nest egg (as well as other factors), reducing your nest egg now can have benefits later.

Finally, you need to figure out how you will spend your time.

Many seniors experience declining mental and physical health as a result of social isolation after they quit their day jobs.

Plan for hobbies, continuing education, volunteer work, travel or even part-time employment, depending on what appeals to you. In many cases, your options are dependent on your resources. If your nest egg is insufficient, some type of employment is probably necessary even during "retirement."

The Investing Answer: If you are in your 60s, and don't have a retirement game plan, now is the time. Remember: It's never too late to plan for retirement. Sock away more money in investment accounts (tax-advantaged and otherwise) and look into your Social Security situation.

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