5 Financial Goals to Hit by Age 60 #Finance

want to retire comfortably in your 60s well in today’s CashNews.co I’ll reveal five essential Financial targets you need to hit to make that dream a reality the first thing that you need to have is your retirement number now what I don’t mean by this is you don’t

need to have enough to retire at age 60 but you do need to know what enough looks like in other words you need to know what amount do you need to have in your Portfolio to put you in a position to retire here’s a simple way you can estimate that start by estimating how much

you might want to spend in retirement maybe that’s $8,000 per month use a simple number next thing you’ll want to do is between you and you and a spouse if you’re married understand what Income sources will you have that don’t come from your

Portfolio this could be Social Security this could be pension this could be other things of that nature let’s assume that you’re married and you and a spouse have 4,000 per month coming in from Social Security benefits what you’ll do next is say okay if 8,000 is

the amount you want to live on 4,000 is coming in from Social Security it’s that Gap that needs to come from your Portfolio in this case that Gap is 4,000 per month or $48,000 per year to use Simple numbers let’s just round that 48,000 per year to $50,000 per year

finally you need to apply a withdrawal rate to that in other words you need to say $50,000 per year needs to represent what portion of my larger Portfolio so let’s assume you’re going to use a withdrawal rate of 5% per year not recommending it not saying that’s

what you should do but let’s just assume that based upon the way your Portfolio is invested the approach you’re going to take 5% is what you’re using well what you would do is say 50,000 per year divided by 5% is $1 million again that does not mean you need to

have $1 million in your Portfolio the day you turn 60 what you can do is you can say what do I have in my Portfolio the day I turn 60 what is my Target and then you can start to understand how far off are you from making that dream a reality so that’s the

first thing that you should have by age 60 which is your retirement number the second thing that you need to have is your investment transition strategy again just like your number you don’t need to have it day one of retirement but you do need to know what it is well your investment

transition strategy says how are you going to get the Portfolio that you have today into the Portfolio that you want to have as soon as you’re retired ideally you don’t have the same Portfolio all the way up until the day before

retirement and then do a massive rebalance the day of there’s too much risk involved with that of what happens if something happens to the market or there’s huge tax bill associated with that ideally there’s a retirement transition let’s assume that today you’re 60 and

you want to retire age 65 what should that retirement transition strategy look like well if today hypothetically let’s say you’re 100% invested in stocks and you have let’s say $1.2 million in your Portfolio let’s assume though based upon your financial plan

and your projections that you’ve gone through you want to have an 8020 Portfolio by the time that you retire so age 65 how do you get from 100% stocks to 80% stocks over 5 years well that’s the retirement transition strategy and by the way there are mult multiple ways

of doing this let me show you one fairly straightforward way to make this math simple make it easy on me as I’m going through this I’m going to assume that you get no growth in your Portfolio so $1.2 million doesn’t grow over the next 5 years to illustrate the

point here let’s assume though that 1.2 million that you have it’s generating $25,000 per year in Dividends and interest let’s then assume that in addition to that $25,000 per year of Dividends and interest that are Cash Flows

into your Portfolio generated by your Investments you’re saving another $35,000 per year to your Portfolio via your 401k contributions plus any employer matching plus any additional Savings that you’re doing so combined

that’s $60,000 per year of Cash Flows between Dividends interest your contributions and any employer matching contributions well what if we assume for a second that all $60,000 of those new Cash Flows are going into the conservative

Assets or the bond Assets of this 8020 Portfolio that you’re looking for well if we do that for 5 years 60,000 * 5 is 300,000 if we had 300,000 000 to your starting Portfolio value which again hasn’t grown under these

assumptions of 1.2 million you now have 1.5 million in your Portfolio 300,000 of it is conservative in Bonds 80% of it or 1.2 million is in stocks well do the math what does that come out to that comes out to an 8020 Portfolio so I’m not

saying that’s the only way to do it the other way of doing it of course is systematically trading your Portfolio almost thinking of it like Landing a plane of here’s where we are today here’s where we want to be in the future let’s take gradual steps to get

there so there’s not that abrupt change dramatically that could potentially be impacted by a quick and significant market downturn so this is just one of many ways to think about it but by 60 you should have that retirement transition strategy that shows you how are you going to get from

point A to point B point B being that place where your Portfolio is ready to support you as you retire and start to live off of it the third thing you need to have by age 60 is your tax plan now your tax plan this is confusing for a lot of people people hear that and say oh I need

to start implementing I need to start doing you need to start converting it’s well maybe but more importantly you need to have an understanding of what tax opportunities are going to present themselves to you over time you don’t want to be caught flat-footed when the right opportunity

presents itself you do want to know what’s coming but typically a tax plan is implemented over a 20 30 plus year retirement it’s not something you’re doing all in one year and calling it good it’s strategically taking advantage of the opportunities that will come up each

year and many times these opportunities are in the future not necessarily today that being said don’t wait for the future to understand what they are let me give you an example of a tool that we use internally to help track this this is our tax planning checklist and what we do as we’re

working through this with a client let’s assume I’m the client here we want to know what Tax Strategies are we going to prioritize for this client based upon their unique situation and the opportunities presented so we might say okay James is 60 and he’s retiring in 5 years uh we

want to do Roth conversions but probably not for later tax loss harvesting we should definitely do that now to decrease tax liability today tax gain harvesting maybe this is something in retirement a Donor advised fund this is something we want to do now or qualified charitable distributions this

is something in the future and so you get the point but this is just showing you what opportunities exist and when are we going to implement them is this a now thing a later thing or of both that’s what your tax plan is is understanding what do we want to do and how can we start to prioritize

some of these different actions to make sure that the lifetime tax plan is going to be implemented the fourth thing you should have in place by age 60 is your asset protection plan what do I mean by asset protection plan well I mean the right Insurance coverages and the right

estate planning coverages now you might think of Insurance as saying well that’s not to protect my Assets that’s to protect me health Insurance life Insurance long-term care Insurance well kind of but

not really health Insurance doesn’t determine who can cover you it just determines whether or not your Insurance company will cover that coverage or will cover that care so if you have the wrong Insurance coverage you can still get Care by a

professional that’s may be out of network it’s just going to cost you a significant amount of money which is ultimately a drain on your Assets same thing with long-term care you can still get the same coverage without long-term care Insurance but it may

be a potential drain on your Assets so really Insurances themselves even though it’s for health or for disability or for life or for Property and Casualty ultimately it’s about your Assets your ability to protect the means that you have

to support your lifestyle throughout retirement so this this is a great time to understand your Insurance coverages that you have and how that compares to what you might need and I say that for two reasons by the time that you’re 60 you may be getting close to the point maybe

you’ve already passed the point at which maybe you don’t need life Insurance maybe you don’t need disability Insurance you may be self-insured via the Assets that you have or maybe not but certainly by 60 you need to look at that

you need to understand do I still need this life Insurance coverage do I still need this disability Insurance coverage do I need to get long-term care Insurance maybe between 50 5 and 65 is when you should be getting that so it’s certainly

not something that you need today but it’s understand the projections of what your future might look like and should you get long-term care Insurance or is it unnecessary based upon some of the context of your financial plan but certainly by 60 you should be reviewing your

Property and Casualty Insurance so what is your car Insurance what is your home Insurance what is your umbrella Insurance now these aren’t things that are unique to age 60 ideally you’re doing these things well before

then but as you’re looking at that next phase of your life most of you by age 60 have a more sign ific Net Worth then than you did say in your 30s or 40s so as that Net Worth increases your ability to retire is going to increase but so too does the risk

because the risk that those Assets are at if you have the wrong coverages there’s also more to lose so make sure by age 60 you have that asset protection plan in place you have the right Insurance coverages you have your trust you have your will you have your

Advanced directives everything that you need to make sure that you and your Assets are protected over the next 20 30 plus years of your life the final thing you need to have in place by AG 60 and arguably the most important thing is your life plan now when you first get started

with retirement planning you’re just putting money into Roth IR ra you’re signing up for your 401k through work you’re just putting money away you’re not really thinking about what you want to do in retirement you’re just thinking look if I can put my head down if I

can earn if I can increase my Income if I can do these different things one day I’ll have enough to retire then you wake up one day you say I’m getting pretty close to that point where I have enough to retire but if you you haven’t put much thought into it if you

haven’t put much intentionality behind it you maybe don’t know what you’re going to retire to and I see far too many people who are significantly well prepared from a financial standpoint but significantly underprepared from a lifestyle standpoint a personal standpoint because

they don’t know after years and years and years of being on the corporate grind and doing things what is it they actually want to do in retirement the sooner you can begin formulating that by the way it doesn’t need to be complicated but what are the things that are meaningful to you

who do you want to surround yourself with what are the activities that would be enjoyable for you to pursue the sooner you can start doing that before you retire the better off that retirement transition is going to be so having that life plan in place by age 60 of understanding what you want your

future to look like and what things you can begin doing today to prepare for that that is going to make that transition so significantly easier as you plan for retirement as you transition into retirement so instead of just being financially prepared for retirement you’re also emotionally in

psychologically prepared for retirement so as we look at this as we look at the five things you need to have in place by the time that you turn 60 the first four things are purely Financial have the plan have the strategy understand what you need to do the fifth one is entirely personal it’s

not enough to get the financial things in order if you don’t have a fulfilling life if you’re not enjoying that next phase now if you resonated with that final point of yes I need to get that life plan in place I recently interviewed Dr Riley Moes and Dr Riley Mo has a famous Ted Talk

where he talks about the four distinct phases of retirement of what that transition looks like for people of how you can as he puts it squeeze the most juice out of retirement if you’re interested in that and understanding how you can make the most of your retirement years I’ve linked

to that CashNews.co right here my conversation with Dr Riley Moes where we talk about the four phases of retirement and what you can do to make the most of that time once again I’m James canel founder root Financial and if you’re interested in seeing how we help our clients at root

Financial get the most out of life with their money be sure to visit us at www. root Financial partners.com