More Americans than ever are turning 65: Over 4 million a year, or 11,400 a day. As a nation we are in an era called "Peak 65" – and every one of those seniors has specific financial challenges.
Those tasks include: Managing retirement savings in 401(k)s and IRAs; figuring out withdrawal rates for a sustainable future; dealing with healthcare costs and Medicare enrollment; deciding when to take Social Security; getting estate plans in order; and giving to the charitable causes that matter most.
It's a whole lot to navigate, which is where financial planners can help seniors chart a successful path forward. A few key pointers for your checklist:
How can I maximize investments?
For those turning 65, the average life expectancy is about 20 more years, according to the CDC. That's why senior investors still need growth potential and exposure to equities, to get their portfolio where it needs to be. Target-date mutual funds are a popular 'one-stop shopping' option, shifting investments over time, or you can design a more customized mix with your financial planner.
How much should I withdraw every year?
A popular rule of thumb is to aim for a 4% withdrawal rate every year, which should ensure you don't outlive your money. But you can also choose a more flexible approach – adjusting withdrawals depending on whether the market is up or down, or planning for extra income in retirement's early years (when you will likely do more spending and traveling).
What healthcare costs can I expect?
A retiring 65-year-old can expect to deal with $172,500 in healthcare costs over the course of their retirement, according to an estimate from Fidelity. Knowing that in advance can help you prepare by setting aside a portion of your portfolio, or spur you to secure additional help like long-term care insurance.
How can I make the best decisions about Social Security and Medicare?
One of the biggest decisions you can ever make is when to start taking Social Security. If you can delay it, perhaps by working another year or two, your monthly check will be bigger for the rest of your life. In a similar way, your Medigap plan decision (to cover what isn't included in Medicare) will affect your healthcare options for years to come.
What documents do I need to put together?
Having a thorough estate plan – including elements like a will, healthcare directives, trusts, power of attorney, and beneficiary designations – is absolutely vital. But many Americans don't even have them: 56% have no such documents whatsoever, according to Trust & Will. That will virtually guarantee family disputes and legal hassles for your heirs.
How can I create a lasting legacy?
We're entering a period that many call the Great Wealth Transfer, with trillions passing from one generation to the next. It's best to be extremely thoughtful about this, and plan out how you want to leave a legacy – whether it's funding charities, or gifting to your heirs, or both. Designing your legacy well in advance can help minimize taxes, and maximize your impact.