How to Retire If You're 60+ With $3 Million Or More

Turning 60 with $3M+ in assets is an incredible achievement that puts you in an enviable financial position. But it also marks the beginning of an important transition. You are entering a new phase of life where your wealth will fund your lifestyle, support your loved ones, and shape your legacy.

Proper retirement planning is essential to ensure that your assets work for you, helping you live out your dreams while safeguarding your financial future.

Planning Your Life and Financial Goals

The first step in retirement planning is determining how you want to live. This might seem like a simple question, but it can actually be one of the hardest decisions to make. For some, the goal is to enjoy the fruits of their labor by traveling the world, pursuing hobbies, or spending time with family. For others, it may mean leaving a significant legacy for their children or charitable causes.

Here are a few critical questions to ask yourself:

• Lifestyle: What type of lifestyle do you envision? Will you be traveling often, perhaps splitting your time between homes in different locations, or are you planning to stay in one place? Understanding your desired lifestyle will determine how much you need to allocate for discretionary spending versus long-term savings. For example, a more active lifestyle with frequent travel may require a more liquid portfolio to fund those expenses.

• Healthcare: What’s your plan for medical care as you age? While Medicare provides some coverage, out-of-pocket expenses can add up, particularly for those who may need long-term care. Have you accounted for these potential costs in your retirement plan? You might need supplemental insurance or a long-term care policy to cover expenses not included in Medicare. With healthcare costs rising, proper planning is essential to avoid dipping into your retirement savings prematurely.

• Legacy: What do you want to leave behind for your heirs or charitable causes? If legacy planning is a priority, you might need to balance spending in retirement with your desire to leave a significant portion of your assets to the next generation. This may involve setting up trusts, choosing tax-efficient estate planning strategies, and considering tools like second-to-die life insurance policies to minimize estate taxes while maximizing your legacy.

Action Steps:

• Write down your specific life goals for retirement, including major purchases, travel plans, or family milestones like weddings or grandchildren’s education.
• Consult with an estate planner to structure your legacy and ensure your assets are protected and distributed according to your wishes.

Managing Tax Brackets and Maximizing Retirement Income

One of the biggest mistakes high-net-worth retirees make is underestimating the tax burden they’ll face. It’s not just about saving enough—it’s about ensuring that your wealth is distributed in the most tax-efficient way. Mismanagement of your tax brackets could lead to significant and unnecessary tax liabilities, which erodes the wealth you’ve spent your life building.

To optimize your tax situation, consider the following strategies:

1. Roth Conversions: Roth IRAs offer tax-free growth and withdrawals, which can be incredibly advantageous in retirement. By converting funds from traditional IRAs to Roth IRAs, you can spread out your tax liability and avoid being pushed into a higher tax bracket when RMDs kick in. The key here is timing—converting too much at once can push you into a higher bracket, while spreading it out over a few years may allow you to stay within a more favorable bracket.

   Example: Let’s say you’re 62 and haven’t yet started RMDs. If your income is low in these years (perhaps because you’re not yet collecting Social Security), this might be the perfect time to convert a portion of your traditional IRA to a Roth IRA at a lower tax rate.

2. Sequence of Withdrawals: The order in which you tap into your retirement accounts can significantly affect your tax burden. Typically, you’ll want to draw from taxable accounts first, followed by tax-deferred accounts like 401(k)s and IRAs, leaving Roth accounts for last. This sequence helps minimize taxable income in the early years of retirement, when you may be in a lower tax bracket, and saves tax-free withdrawals from Roth accounts for later.

3. RMD Planning: Once you turn 73, the IRS requires you to begin taking RMDs from tax-deferred accounts like traditional IRAs and 401(k)s. These withdrawals are fully taxable, and if not planned for, they can push you into a higher tax bracket. By reducing the balance in these accounts through Roth conversions or strategic withdrawals before age 73, you can mitigate the tax impact of RMDs later.

4. IRMAA Considerations: If your income exceeds certain thresholds, you may face higher premiums for Medicare Part B and Part D due to the Income-Related Monthly Adjustment Amount (IRMAA). Carefully managing your income and staying below these thresholds can help reduce or avoid IRMAA surcharges.

   Action Steps:

   • Work with a tax advisor to determine the optimal timing for Roth conversions.
   • Map out a sequence of withdrawals from your accounts, with an eye on both current and future tax brackets.
   • Consider using a tax projection tool to simulate your tax situation over the next 20-30 years.

Asset Protection and Risk Management

While building wealth is important, protecting it is equally critical as you approach retirement. You need to ensure that your assets are shielded from market volatility, healthcare emergencies, and other risks that could derail your plans.

1. Diversification and Risk Management: At age 60, you may still want exposure to growth through equities, but you’ll also want to reduce your exposure to volatility. Consider a diversified portfolio that balances riskier assets with safer ones like bonds, annuities, or other income-generating investments. As you age, your portfolio should shift to prioritize protection and income generation over growth.

   Example: A client at 60 may have a portfolio that is 60% stocks and 40% bonds. As they approach 70, they may shift to a more conservative allocation, such as 40% stocks and 60% bonds, to protect against market downturns.

2. Insurance: Umbrella insurance can provide additional liability protection, covering costs beyond your primary home or auto insurance policies in the event of a lawsuit or other unexpected events. Long-term care insurance is also crucial, as it can help cover expenses not typically paid for by Medicare or other forms of health insurance.

3. Estate Planning: If you’re concerned about protecting your assets from estate taxes or creditors, you might consider setting up an irrevocable trust. Trusts can shield your assets while ensuring they are distributed according to your wishes. Additionally, tools like second-to-die life insurance policies can help provide liquidity for estate taxes, ensuring your heirs receive as much of your estate as possible.

   Action Steps:

   • Review your insurance policies to ensure they provide adequate coverage for potential risks.
   • Meet with an estate planning attorney to determine if trusts or other asset protection strategies are right for you.
   • Reassess your investment portfolio to ensure it’s aligned with your risk tolerance and retirement goals.

Working with a Fiduciary Financial Planner: Designing a Life You’ll Be Proud Of

Navigating retirement planning with $3M+ in assets is no small feat. With the complexities of tax strategies, healthcare planning, asset protection, and legacy considerations, having the right team in place is crucial. This is where a fiduciary retirement planner becomes indispensable.

A fiduciary is legally obligated to act in your best interests, ensuring that every decision made aligns with your personal and financial goals. At Haywood Wealth, we specialize in comprehensive retirement and wealth management services tailored specifically to affluent individuals. Our goal is not just to manage your money but to help you design a retirement that reflects your deepest values and aspirations.

We take pride in offering personalized strategies that allow you to:

• Optimize your tax situation and retirement income,
• Protect your assets and legacy,
• Align your financial plan with your personal goals, and
• Live a life you’ll be proud of.

Working with a financial planner who understands the nuances of wealth management allows you to feel confident in the decisions you make for yourself and your loved ones.

Live the Life you Desire

You have the opportunity to design a retirement that aligns with your dreams and goals. This isn’t just about the money—it’s about living a life that reflects your values, gives you peace of mind, and allows you to enjoy the fruits of your hard work. With careful planning and the right guidance, you can ensure that your wealth supports the life you want to live, while also leaving a meaningful legacy.

Now is the time to take control of your future.

Contact us today to create a personalized retirement plan that aligns with your goals and secures your financial peace of mind.