Once you hit 60, you’re that much closer to retirement. You can take a few specific steps when the time comes to better prepare for and fully enjoy your golden years, even if it’s still a year or two away. Well discuss seven such actions in this article.
Thinking about kickin’ back at 60 and saying goodbye to the daily grind? You’re not alone! Many folks dream of early retirement, but the big question is: are you financially ready? As someone who’s spent years helping people navigate their retirement journeys, I’ve seen both triumphs and struggles. Let’s dive into what it really takes to prepare for retirement at 60 and how to make sure your golden years truly shine.
Why Retiring at 60 is Both Awesome and Challenging
Once you turn 60, you’re in a great place: you’re still young enough to enjoy an active life, but you also have to deal with some unique problems. According to the Transamerica Center for Retirement Studies, the average age of retirement in the United States is actually 2062, with about 2029 percent of people retiring between the ages of 60 and 64. But here’s the deal .
The Good Stuff:
- You can withdraw from retirement accounts penalty-free (after 59½)
- You’re likely still healthy and energetic enough to enjoy retirement fully
- You’ll have more time to travel, pursue hobbies, or even work part-time if you want
The Tricky Parts:
- No Social Security benefits yet (earliest age is 62)
- No Medicare until 65
- Your retirement savings need to last longer
How Much Money Do You Actually Need?
This is the million-dollar question (sometimes literally!). According to retirement planning experts, you should aim to have about 17 times your annual salary saved by retirement to maintain your pre-retirement lifestyle. If you’re earning $100,000 annually, that means you’re looking at needing around $1.7 million in your retirement accounts.
If we follow the popular 4% rule for withdrawals you can calculate your needs like this
- Determine your annual retirement income needs (typically 70-90% of pre-retirement income)
- Multiply by 25 to get your target savings amount
For example:
- If you need $70,000/year in retirement income
- You’d need approximately $1.75 million saved
- If you need $90,000/year
- Your target would be around $2.25 million
But don’t panic if you’re not there yet! Let’s look at a step-by-step plan to get you retirement-ready
Your 10-Step Plan to Retire at 60
1. Start Saving NOW (or Keep Going Strong)
I can’t stress this enough – the sooner you start, the better! Compound interest is seriously magical. If you’ve been saving, fantastic! If not, it’s not too late, but you’ll need to be aggressive. Start small if necessary, but commit to increasing your contributions regularly.
Remember, saving is a habit we can all live with. It may seem like a long time away, but every dollar you save now will earn you more in the future.
2. Calculate Your Retirement Needs
Only about half of Americans have taken this important step! To reach your goal, you need to know what it is.
Most experts recommend planning to replace 70-90% of your pre-retirement income. This percentage might be lower if your mortgage will be paid off or higher if you have significant healthcare costs or travel plans.
Try using retirement calculators online or, better yet, work with a fiduciary financial planner who can help you create a personalized retirement roadmap.
3. Max Out Your Employer’s Retirement Plan
If your company has a 401(k) or similar plan, put in as much as you can! The maximum contribution for 2025 is $23,500, and people over 50 can add an extra $7,500 as a catch-up contribution. If you’re between 60-63, that catch-up amount increases to $11,250!.
At the very minimum, contribute enough to get the full employer match – that’s FREE MONEY, folks! Don’t leave it on the table.
4. Understand Your Pension Benefits (If Applicable)
If you’re one of the lucky ones with a traditional pension plan, make sure you understand exactly how it works. Request an individual benefit statement to see what your benefit is worth.
Before changing jobs, find out how it will affect your pension. Also check if you have benefits from previous employers – you might have forgotten about them!
5. Diversify Your Investments Wisely
How you save can be just as important as how much you save. As you approach 60, your investment strategy should generally become more conservative, but don’t go too conservative too quickly.
A diversified portfolio helps reduce risk while maintaining growth potential. Consider working with a financial advisor to ensure your asset allocation matches your risk tolerance and timeline.
6. Don’t Raid Your Retirement Accounts Early
This is a biggie! Withdrawing from your retirement accounts before 59½ generally means penalties and lost growth potential. Even after 59½, be strategic about withdrawals to make your money last.
If you change jobs, either leave your savings in your current plan, roll them into an IRA, or transfer to your new employer’s plan. But DON’T cash out!
7. Open and Fund an IRA
In addition to your employer’s plan, consider opening an Individual Retirement Account (IRA). For 2025, you can contribute up to $6,500 annually (plus an additional catch-up contribution if you’re over 50).
You have two main options:
- Traditional IRA: Tax-deductible contributions now, taxed withdrawals in retirement
- Roth IRA: After-tax contributions now, tax-free withdrawals in retirement
The Roth option can be particularly valuable for tax-free income in retirement!
8. Plan for Healthcare Costs
This is often the biggest oversight in retirement planning! Remember, Medicare doesn’t kick in until 65, so you’ll need a plan to cover those 5 years if you retire at 60.
Options include:
- Staying on your employer’s plan through COBRA (typically for up to 18 months)
- Joining your spouse’s health insurance
- Purchasing coverage through the Affordable Care Act marketplace
- Using health savings accounts (HSAs) if you’re eligible
Budget for healthcare premiums and out-of-pocket costs – they’re likely to be higher than you expect!
9. Understand Your Social Security Options
While you can’t claim Social Security at 60, it’s crucial to understand how your claiming age affects your benefits. The earliest you can claim is 62, but doing so permanently reduces your benefit by up to 30% compared to waiting until your full retirement age (67 for those born after 1960).
Waiting until 70 can increase your benefit by up to 32%! In 2025, the maximum annual benefit for claiming at 62 is $33,972, while waiting until 70 could give you up to $61,296. That’s a HUGE difference!
Use the Social Security Administration’s calculators to estimate your benefits under different claiming scenarios.
10. Consider Working Part-Time
Many successful retirees find that part-time work provides both additional income and personal fulfillment. Consider consulting in your field, turning a hobby into a side business, or finding a low-stress job you enjoy.
Even earning $10,000-$20,000 annually can significantly reduce the pressure on your retirement savings and help them last longer.
Warning: Common Pitfalls to Avoid
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Underestimating your longevity: The average American spends about 20 years in retirement. Plan for a longer life than you expect!
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Forgetting about inflation: What costs $50,000 today might cost $67,000 in 10 years with just 3% annual inflation.
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Ignoring tax planning: Strategic withdrawals from different account types can significantly reduce your tax burden.
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Taking on debt close to retirement: Try to enter retirement debt-free, especially high-interest debt.
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Not having an emergency fund: Unexpected expenses don’t stop in retirement. Keep 3-6 months of expenses in cash.
My Final Thoughts
Retiring at 60 is absolutely doable with proper planning and discipline. The key is to start now, be consistent, and adjust your plan as needed. Don’t be afraid to ask for help – a good financial advisor can make a world of difference.
Remember, retirement planning isn’t just about money – it’s about creating the lifestyle you want. Think about where you’ll live, what you’ll do with your time, and how you’ll stay physically and mentally active.
I believe everyone should strive for financial freedom by 60, even if you plan to continue working. There’s something incredibly empowering about working because you want to, not because you have to!
What steps have you already taken toward retirement? Do you have a specific retirement age in mind? I’d love to hear about your journey in the comments below!
Note: This article contains general information only and should not be considered financial advice. Everyone’s situation is unique, and I recommend consulting with a qualified financial advisor before making important retirement decisions.
Evaluate your future healthcare needs
You can get health insurance from your old employer if you got a good exit package if you retire before age 65. If not, you can look into coverage through your spouse’s plan if he or she is still working.
There’s also COBRA, which you can access for up to 18 months after separating from your employer—though the cost is sometimes prohibitive—as well as insurance via HealthCare.gov. Several states have their own exchanges that allow you to purchase coverage through the state or otherwise their federal counterpart. Both state and federal exchanges offer coverage subsidies based on income: meaning that even if you have considerable assets, you may still qualify for a subsidy if you’re no longer working.
Once you become eligible for Medicare, this will act as your primary insurance; whenever you incur a healthcare expense, therefore, the bill is first submitted to Medicare with your secondary insurance covering the remaining amount (should a balance on the bill exist). However, if you’re still part of an employer group plan that covers 20+ employees or is part of a multi-employer group health plan (generally one jointly sponsored by two or more employers), your employer plan will act as the first payer with Medicare kicking in secondarily. This is true whether you have coverage through your employer’s plan or otherwise your spouse’s. Be sure to determine which plan is your primary one so its easier to manage your insurance going forward.
Lastly, you should think about how to pay for things like long-term care, vision, and dental insurance that Original Medicare doesn’t cover.
Develop a tax-efficient withdrawal strategy
Withdrawing funds in a tax-efficient manner—selecting which accounts to draw from and when—can help preserve more of your wealth and potentially enhance your retirement lifestyle. It’s too bad there isn’t a single “best” strategy for this situation, because the tax-efficient way to withdraw your money depends on many things, including your tax bracket. Click here to read more about tax-efficient withdrawal strategies in retirement.
How prepared are you to retire by the time your 60?
FAQ
What is the best retirement plan for a 60 year old?
Certain types of investments can help you save for retirement. These include 401(k) and 403(b) plans, traditional and Roth IRAs, cash-value life insurance plans, and guaranteed income annuities.
What is the first thing to do before retiring?
The very first thing to do when you retire is to relax and savor your achievement with loved ones before diving into new plans.
What is the $1000 a month rule for retirement?
The “$1,000 a month rule for retirement” is a simple way to figure out how much you need to save to have a steady monthly income in retirement. Usually, you’ll need to save $240,000 for every $1,000 you want to make each month. Based on a 5% annual withdrawal and 5% annual return, this rule says that taking out $1,000 a month from a $240,000 portfolio would give you that much income without using up your savings.
How much money do I need to comfortably retire at 60?
Most experts recommend that a couple save between seven and eight times their combined annual salary by age 60 in order to have a comfortable retirement.
How do I prepare for retirement after age 60?
By reviewing how much you have saved and thinking about how much longer you want to work, you may be able to update and improve your retirement plan. Use the following guidelines to get ready for retirement after age 60. Budget for these expenses when remaining in your home during retirement.
How do I plan an early retirement?
Retiring successfully at any age requires balancing income with expenses. So, the first step in planning an early retirement is to decide how you want to live and how much income it will take to support that lifestyle. Next, you find out how much post-retirement income you can generate from investments, part-time work or other sources.
Should I retire early at age 60?
Of course, if you are looking to retire “early” at age 60, you will need to reach retirement planning milestones at younger ages. If you want to maintain your pre-retirement lifestyle (which should be the goal if you can swing it), you will want to have about 17 times your annual salary at retirement age.
How do I prepare for retirement?
The sooner you get comfortable with your choices and what they could mean financially, the more secure you will be in your retirement planning. You need to build and maintain your network even in retirement. Use opportunities, in person and online, to showcase your talents.
How much money do you need to retire at 60?
The first step for retiring at 60 is to determine how much money you’ll need. A rule of thumb for projecting necessary retirement income is to take pre-retirement income and multiply it by between 70% and 90%.
What happens if you retire at 60?
Bonus points if you have a large Roth IRA or Roth 401 (k) that generates tax-free income. Retiring at 60 means you won’t yet be eligible to claim Social Security, which could put you in a financial bind, depending on how much you have saved for retirement and your ideal cost of living.