When you turn age 70, money matters can change. New things start, others stop, and certain options become more attractive. As people continue to live longer, you may consider waiting until age 70 to retire. But even if you retire earlier, keep in mind these money changes when you turn 70.
Social Security Accumulation Halts
Up to age 70, your Social Security benefits accumulate delayed retirement credits. After age 70, the accumulation stops and there is no benefit in waiting to collect benefits.
Married couples may benefit by delaying retirement for the highest earning spouse to age 70. The higher benefit amount will continue as a survivor benefit for the longest living spouse. This offers a type of Life insurance with inflation-adjusted lifelong income.
Age 70 ½ Means Required Minimum Distributions from Retirement
On April 1 of the year after you reach age 70 1/2, the IRS requires you to take withdrawals from your IRA or 401(k) retirement accounts. While many wait until they’re required to withdraw, it’s unnecessary. If you have lower income in the years before you turn 70, it may make sense to withdraw money from your retirement accounts and pay little to no tax. Run a tax projection each year to decide what’s best for your situation.
Reverse Mortgages May Become More Attractive
After age 70, you may want to consider the benefits of a reverse mortgage. These allow you to use the equity in your home for income while you remain in your home as long as you want. Contrary to popular belief, the bank can’t take your house with a reverse mortgage. Basically, you receive guaranteed income at no risk.
Investment Risks Should be Minimized
While you want your investments to generate the income you need, age 70 and beyond is not a good time to take risks. You need your money to last the rest of your life.
You have a couple options:
- Use safe investments, which may pay a lower amount of income, but your principal is not guaranteed.
- Build a portfolio of investments with a set of withdrawal rate rules.
Still not sure what to do with your investments? Work with a qualified retirement planner to decide what’s best for you.
Must-Have Estate Planning Documents
By age 70, you should make sure you have a medical emergency plan in place. This can be written instructions given to a trusted family member or friend.
It’s also a good idea to name someone to manage your affairs if you were to become ill or incapacitated. This can be finalized with a trust or a durable power of attorney. In addition, review your beneficiary designations and all other important estate planning documents such as a will or trust.
Are you nearing age 70? Don’t forget about completing your long term care plan. Get instant Long Term Care Insurance rates online and speak with an LTC Specialist to find out if you qualify.
Disclaimer: This article does not constitute legal or tax advice and should not be construed as tax or insurance advice. It was neither written nor intended for us by any taxpayer for the purpose of avoiding penalties, and it cannot be so used. Please speak with your tax advisor or long term care insurance specialist in regards to a particular situation.