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For most of your working life, retirement may feel like a distant achievement, but things often change once you hit age 60. At that point, if you aren’t practicing certain financial behaviors, retirement may feel more like an out-of-control truck that’s bearing down on you.
But even if you’re a late starter, there’s always time to improve your financial position. Here’s a list of financial milestones you should try to hit before age 60 if you’re looking to enjoy a well-planned, well-financed retirement.
A Budget With Positive Cash Flow
Many Americans struggle with a cash-positive budget in which they have more money at the end of the month — or at least the same amount — as when they started. As you approach your 60s, however, it’s an important goal to reach.
After you retire, you’re likely to be living on a fixed budget, at which point negative cash flow could be ruinous. This is the time to really work to balance your budget so that you can be prepared for life in retirement.
Start by cutting out as many discretionary expenses as necessary until your cash flow turns positive. This may be as simple as trimming a few streaming services or as difficult as cutting down your travel, shopping and dining out expenses.
A Sizable Emergency Fund
During your working career, you may have heard the suggestion that you should tuck away at least three to six months of expenses in an emergency fund. This recommendation applies to retirement as well.
Are You Retirement Ready?
While you may not have to worry about job loss if you’re fully retired, there are a host of other expenses that are even more likely to crop up as you age, particularly those related to your health. You also won’t have a ready source of income, bonuses and benefits from a full-time job.
If you encounter a string of emergencies after you’re retired, you risk going into debt if you don’t have a sizable emergency fund, and that could throw a wrench in your entire retirement plan.
Retirement Accounts Worth 10x Your Current Salary
At age 60, you might not have many years left to beef up your retirement accounts. This is particularly true if you plan to file for Social Security benefits at the earliest possible age of 62.
If you can sock away 10x your current salary by the time you reach 60, however, you’ll likely have enough to fund your retirement.
As your lifestyle and longevity play a big part in how long your money will last, the general recommendation of saving 10x your salary is often a better guidepost than a fixed sum, such as $1 million.
No Credit Card Debt
If you can be entirely out of debt by the time you turn 60, that’s great! You’ll have a lot more financial flexibility as you head into retirement. But if you still have mortgage and/or investment debt, it’s usually still okay as long as those loans are generating sufficient cash flow.
Are You Retirement Ready?
The real demon you should strive to avoid is credit card debt. That type of debt diminishes your cash flow, rather than improving it, and it accrues interest at an astonishing rate, often over 20% annually.
You’ll absolutely want to shoot to eliminate all credit card debt before you retire, so setting 60 as a milestone date is a good practice.
35 Years of Solid Earnings
If you’re looking for a secure retirement, earning as much as you can in your working career is a big help. But if you plan on snagging the largest possible Social Security benefit that you can, you’ll want to make especially sure that you’ve locked away at least 35 years of solid earnings.
Why? Because the Social Security Administration only uses your top 35 earning years when it calculates your retirement benefit. If you had some low-earning years in your 20s, you’ll want to make sure you replace those in the SSA’s calculations with high-earning years in your 50s and 60s.
Passive Income Funding Your Lifestyle
If you can generate enough passive income to fund your entire lifestyle, congratulations! This is more of a “reach” goal, as it’s hard to attain unless you start working towards it at a younger age. But it’s also one of the absolute best ways to fund your retirement.
If you can earn enough income from sources like dividends, interest and rental income to pay all your bills, you won’t be as reliant on Social Security, your pension or retirement accounts to get by. You also won’t be as exposed to calamitous events like stock market crashes or cuts in Social Security benefits.
Are You Retirement Ready?
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