Turning 60 can be a landmark for many of us. You might be getting ready to retire or think about your next employment gig. Even if you plan to continue working in some capacity there are still things that you need to be aware of and, in some cases, act to avoid surprises down the road. If you are 60 or getting there soon, you still have time to get your finances in order if you do plan to retire in the next few years. Here are three things that I recommend you do right now.

1. Get Social Security Benefit Information. Remember those update we used to get from the Social Security Administration every year. Yeah, they don’t do that anymore. But you can still find out about your retirement benefit by using the Social Security Retirement Estimator. It shows what your estimated retirement benefit from Social Security will be at different ages.

   This is an important step as most people have no idea how much they will receive from Social Security upon retirement. So, if you do this when you are 60 you still have time to make any necessary adjustments. When you take your Social Security benefit will impact your monthly check in a significant way. If you were born in 1960 or later, your Full Retirement Age (FRA) is 67. If you choose to receive benefits before you reach that age, your benefit will be reduced by 6% per year. Let’s say your FRA benefit is $2,000 per month. If you decide to take your benefit at age 62 the amount you receive will be $1,400!

   Luckily the opposite is true as well. IF you delay receiving your benefit until age 70 your benefit will increase by 8% for every year beyond your FRA. Let’s use that same $2,000 FRA example. If you delay receiving your benefit until age 70 you will receive $2,480, a 24% increase (8% x 3 years).

   Hopefully you can see why some advance planning can have a big impact on the benefit that you receive!

2. Compute the Income You Expect from Retirement Plans. Just as we did with Social Security, we need to figure out what we will receive in income form our retirement plans whether that is a pension, 401k or other defined contribution plan or both. So how do you figure this? Common practice today is to use what is known as a safe withdrawal rate. The common rate used today is 4%. The idea is that if you withdraw 4% of your retirement savings each year it will last your lifetime. The idea is based on the premise that if you have a portfolio of 50% stocks and 50% bonds it should yield around 6%. Keep in mind that the S&P 500 index averaged 10% from 1926 to 2018. So, if you withdraw 4% per year that leaves 2% to cover inflation.

   Let’s use the example of a retirement plan balance of $500,000. If we apply the 4% safe withdrawal rate you would receive $20,000 per year. If you have a million dollars you would receive $40,000 per year.

3. Increase Retirement Plan Contributions. If after looking at your Social Security benefit and income from your retirement plans you don’t think you will have enough income in retirement, then now is the time to increase your contribution. Before you begin let’s look at some calculations you need to do.

   First, you need to estimate how much income you need in retirement. Then you need to figure out what you expect from Social Security and your retirement plans. As an example, you have determined that you need $100,000 per year to live comfortably in retirement. Your expected sources of income are:

• Social Security for you and your spouse – $40,000 per year
• Your pension will provide $15,000 per year
• Your spouse has a 40ik with $750,000 that will produce $30,000 per year
• Total income will be $85,000 per year

With that you have a shortfall of $15,000 per year. As we learned earlier you may be able to delay Social Security to get a little more. You can also start increasing your contribution to your 401k or other defined contribution plans. This year you can contribute $19,000 plus a catch-up provision of $6,000 since you are over age 50. You may also be able to contribute to an IRA account depending on your adjusted gross income.

For other ideas, please check out my Guide to Getting Started When You are Starting Late.