A Guide to Financial Planning in Your 60s

Entering your 60s is a critical phase for retirement planning. This decade often marks the transition from saving to preparing to generate income from your accumulated assets. Financial planning for 60 year olds typically focuses on maximizing remaining retirement contributions, determining when to claim Social Security and developing a strategy to turn savings into reliable retirement income. It’s also important to prepare for healthcare costs and position your investments to support long-term financial stability.

If you’re looking for help preparing for retirement, consider reaching out to a financial advisor.

Maximize Your Retirement Accounts

Part of financial planning for 60 year olds may involve maximizing contributions to your retirement accounts during your final working years. Understanding contribution limits, as well as catch-up amounts, can help you bolster your retirement savings and secure your financial stability.

Contribution limits for retirement accounts such as 401(k)s and IRAs are set annually by the IRS.

For 2026, the contribution limit for a 401(k) is $24,500, while the limit for an IRA is $7,500. These limits apply to individuals under 50, but those over 50 benefit from additional allowances.

Individuals over 50 can contribute an additional $8,000 to their 401(k), and an extra $1,100 to their IRA. These additional contributions can help you compensate for any years when your contributions may have been lower.

Those between the ages 60 and 63 can also make a special “super” catch-up contribution of up to $11,250 to their 401(k) or 403(b) plans.

Roth accounts, including Roth IRAs and Roth 401(k)s, offer unique tax advantages that can be particularly beneficial as you near retirement. Contributions to Roth accounts are made with after-tax dollars, but withdrawals in retirement are tax-free. This can be helpful if you expect to be in a higher tax bracket in the future.

And since contributions to traditional IRAs and 401(k)s are tax-deductible, they can lower your taxable income. For those nearing retirement, maximizing these tax deductions can result in significant tax savings.

How to Turn Your Savings Into Retirement Income

Financial planning for 60 year olds involves preparing to shift from saving for retirement to generating income from those savings. Instead of contributing to retirement accounts, your focus will gradually move toward creating a sustainable withdrawal strategy that can support your lifestyle for decades.

One common guideline is the 4% rule, which suggests withdrawing 4% of your retirement savings during the first year of retirement and adjusting that amount annually for inflation. For example, if you retire with $800,000 in savings, a 4% withdrawal would provide $32,000 in annual income. While this rule can offer a useful starting point, your ideal withdrawal rate will depend on factors such as your life expectancy, investment performance, inflation and spending needs.

It’s also important to consider the order in which you withdraw from different accounts. Taxable brokerage accounts are often used first, allowing tax-advantaged retirement accounts to continue growing. Traditional IRAs and 401(k)s are typically withdrawn later, while Roth accounts may be preserved longer because qualified withdrawals are tax-free. This approach can help manage your tax liability and extend the longevity of your savings.

Required minimum distributions (RMDs) are another key factor to consider. Starting at age 73, the IRS requires you to withdraw a minimum amount each year from traditional retirement accounts such as IRAs and 401(k)s. These withdrawals are taxed as ordinary income and can affect your overall tax situation. Planning ahead for RMDs in your early 60s can help you avoid large taxable withdrawals later.

Our RMD calculator can help estimate how much to withdraw from pre-tax retirement accounts upon reaching RMD age.

Required Minimum Distribution (RMD) Calculator

Estimate your next RMD using your age, balance and expected returns.

Quickly estimate your RMDs and when to take them

RMD Amount for IRA(s)

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RMD Amount for 401(k) #1

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RMD Amount for 401(k) #2

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About This Calculator

This calculator estimates RMDs by dividing the user's prior year's Dec. 31 account balance by the IRS Distribution Period based on their age. Users can enter their birth year, prior-year balances and an expected annual return to estimate the timing and amount of future RMDs.

For IRAs (excluding Roth IRAs), users may combine balances and take the total RMD from one or more accounts. For 401(k)s and similar workplace plans*, RMDs must be calculated and taken separately from each account, so balances should be entered individually.

^*The IRS allows those with multiple 403(b) accounts to aggregate their balances and split their RMDs across these accounts.

Assumptions

This calculator assumes users have an RMD age of either 73 or 75. Users born between 1951 and 1959 are required to take their first RMD by April 1 of the year following their 73rd birthday. Users born in 1960 and later must take their first RMD by April 1 of the year following their 75th birthday.

This calculator uses the IRS Uniform Lifetime Table to estimate RMDs. This table generally applies to account owners age 73 or older whose spouse is either less than 10 years younger or not their sole primary beneficiary.

However, if a user's spouse is more than 10 years younger and is their sole primary beneficiary, the IRS Joint and Last Survivor Expectancy Table must be used instead. Likewise, if the user is the beneficiary of an inherited IRA or retirement account, RMDs must be calculated using the IRS Single Life Expectancy Table. In these cases, users will need to calculate their RMD manually or consult a finance professional.

For users already required to take an RMD for the current year, the calculator uses their account balance as of December 31 of the previous year to compute the RMD. For users who haven't yet reached RMD age, the calculator applies their expected annual rate of return to that same prior-year-end balance to project future balances, which are then used to estimate RMDs.

This RMD calculator uses the IRS Uniform Lifetime Table, but certain users may need to use a different IRS table depending on their beneficiary designation or marital status. It's the user's responsibility to confirm which table applies to their situation, and tables may be subject to change.

Actual results may vary based on individual circumstances, future account performance and changes in tax laws or IRS regulations. Estimates provided by this calculator do not guarantee future distribution amounts or account balances. Past performance is not indicative of future results.

SmartAsset.com does not provide legal, tax, accounting or financial advice (except for referring users to third-party advisers registered or chartered as fiduciaries ("Adviser(s)") with a regulatory body in the United States). Articles, opinions and tools are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual. Users should consult their accountant, tax advisor or legal professional to address their particular situation.

Creating reliable income streams can also strengthen your retirement plan. Social Security benefits, pensions, investment income and annuities can all contribute to steady cash flow. Diversifying your income sources can help reduce the risk of relying too heavily on a single source and provide greater financial stability throughout retirement.

Deciding When to Retire

Part of financial planning for 60 year olds involves determining when you want to retire.

Choosing when to stop working will significantly impact your financial situation in retirement. It’s one of the most important decisions you’ll have to make when financial planning for 60 year olds. In making this decision, it’s necessary to understand your full retirement age (FRA), which is the age at which you are entitled to receive full Social Security benefits.

The FRA varies depending on your birth year, but for most people, it ranges from 66 to 67 years old.

Retiring before your FRA will reduce your monthly benefits, while delaying retirement past your FRA can increase your benefits. So if you start receiving benefits at 62, the earliest you can possibly do so, your monthly payments will be lower than if you wait until your FRA. On the other hand, delaying benefits until after your FRA can increase your monthly payments by up to 8% for each year that you delay. However, delaying your retirement past the age of 70 does not result in any further increases in your monthly Social Security benefits.

Understanding the implications of when you choose to stop working can help you make a more informed decision about when to retire. Continued employment can not only increase your retirement savings, but also reduce the number of years you need to rely on those savings. Working longer can also give you access to employer-sponsored health insurance. This helps delay your need to purchase individual coverage or rely solely on Medicare.

Medicare Considerations

Another part of financial planning for 60 year olds involves understanding and budgeting for healthcare and insurance costs.

Medicare eligibility begins at age 65, and Medicare will provide the bulk of your healthcare coverage in retirement. But even with Medicare, out-of-pocket costs can accumulate, making supplementary insurance worth considering.

Medigap, also known as Medicare Supplement Insurance, helps cover some of the healthcare costs not included in Medicare, such as copayments, coinsurance and deductibles. These plans are standardized and sold by private companies, offering various levels of coverage. Evaluating different Medigap policies can help retirees choose a plan that aligns with their healthcare needs and budget, thereby supporting their overall financial security.

Long-term care insurance is also worth considering when planning for healthcare costs in retirement. This type of insurance helps cover the cost of services that assist with activities of daily living, such as bathing, dressing and eating, which Medicare does not typically cover. Given the high cost of long-term care facilities and in-home care services, having this insurance can protect your savings and provide peace of mind. It’s advised to purchase long-term care insurance in your late 50s or early 60s, when premiums are more affordable.

Bottom Line

A retired couple in their 60s reviewing their retirement plan.

Financial planning for 60 year olds involves maximizing retirement savings, including making catch-up contributions, as well as deciding when you’ll retire and budgeting for health care costs. You might want to explore supplementary insurance options and consider long-term care insurance to protect your savings and provide peace of mind.

Financial Planning Tips

If you’re creating a financial plan, a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area. You can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
In addition to long-term care insurance, life insurance is something to consider, as well. There are different types of life insurance you can choose from, including term and permanent life. Calculating how much life insurance you need can help when choosing which policy is best for you.