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Turning 70? Here’s How That Will Impact Your Financial Plan

Turning 70? Here’s How That Will Impact Your Financial Plan

July 06, 2021
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16, 18, 21, 50, 59½, 62, 65, 66-67, 70. What do all these numbers have in common? In the U.S., these are milestone ages that indicate you’re now old enough to be afforded new rights, opportunities, or—in the case of the last one—requirements. 

Ages 16, 18, and 21 are exciting times in our youth, when we become eligible to drive, vote, and drink, respectively. But the older we get, the less we anticipate the next milestones (partly because we want to hold on to our youth as long as we can!). When you turn 50, you can start saving more for retirement. When you turn 59½, you’re eligible to withdraw from your retirement accounts without penalty. And when you turn 62, you can start taking Social Security benefits if you wish.

But what about age 70? Besides achieving a decade in which we’re usually no longer working and can enjoy the retirement we deserve, there are 3 things to be aware of in your 70s that may affect your financial plan.

1. Required Minimum Distributions

Required minimum distributions (RMDs) are mandatory withdrawals from tax-advantaged retirement plans, such as a 401(k) or traditional IRA. Unfortunately, the government can’t allow our investments to grow tax-free indefinitely. It used to be the case that RMDs kicked in at age 70½. Now, thanks to the SECURE Act, retirees can put RMDs off until age 72. 

For individuals who are still working or who have been able to live off pensions and Social Security benefits, these extra years of tax-free compounding interest can result in huge gains and even greater security. But when you turn 70, it’s time to start planning for your RMDs and the strategies you can implement, such as calculated Roth conversions, to minimize your tax burden.

2. Social Security

If you’ve been delaying taking Social Security to maximize your benefits, this is the last year you can do so. Your benefits won’t increase anymore, and the longer you wait to enroll in benefits, the more money you’re going to miss out on.

If you don’t remember to enroll in Social Security benefits on the exact day of your birthday, that’s okay. The Social Security Administration will pay you retroactive benefits for up to 6 months after your birthday. 

3. Portfolio Review

Finally, it’s time to conduct a portfolio review when you turn 70 and reposition your investment allocations if necessary. Now that you’ve reached age 70, you’re more likely to live until your 90s, which means that you may need your retirement savings to last two more decades! (1)

When you’re living off your retirement savings, it’s incredibly important to balance your positions correctly between growth and risk. Allocating too much of your assets in risky securities could destroy your retirement savings and forever diminish your lifestyle opportunities. But with decades of life ahead of you, you don’t want to miss out on more secure growth strategies either.

How We Help

If you’re approaching this important milestone and haven’t started reviewing your financial plans for the next decade, it’s time to do so now. At Grace Wealth Management Group, we believe you are better prepared for your future when you have a solid understanding of your plans for how to get there. 

We can help you develop strategies for your RMDs, enroll in Social Security benefits, and review your portfolio to assess the correct allocations for your unique situation. Schedule an appointment here to prepare for this important milestone and take advantage of the opportunities available to you.

About Jim Peters

Jim Peters is an independent financial advisor and the founder of Grace Wealth Management Group, Inc., a full-service financial firm committed to helping people pursue their financial goals. With more than 24 years of experience in the industry, Jim combines his extensive knowledge with his genuine interest in helping people pursue financial independence. Beyond his experience, he is certified as both a Chartered Life Underwriter® (CLU®) and Chartered Financial Consultant® (ChFC®), meaning he has advanced training and knowledge in financial planning and insurance. Based in Irvine, California, Jim specializes in working with individuals, families, and businesses throughout Orange County. To learn more, connect with Jim on LinkedIn or visit www.financialadvisorirvine.com.

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(1) https://www.hamiltonproject.org/charts/probability_of_a_65_year_old_living_to_a_given_age_by_sex_and_year