As you enter your 60s, budgeting tips like reviewing retirement income, paying off debt, downsizing, and meeting with a financial advisor can help you confidently prepare for your future retirement years.
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Table of Contents
Table of Contents
Key Takeaways
Review your income streams and expenses to see if you have enough money for retirement.
Make a list of your debts and create a payoff plan before retiring.
Consider downsizing your home and possessions to save money.
Cut back on subscriptions, cable, cell plans, etc. that you may not need in retirement.
Meet with a financial advisor to create a retirement plan tailored to your goals.
As someone in your 60s, you likely have many years of money management experience under your belt. But financial needs (and wants) often change with every life stage. Financial preparation starts with a careful evaluation of where you are and where you want to go.
Having a firm handle on your finances could help you better prepare for tomorrow — and retirement. So, whether retirement is just around the corner or a few years away, some basic budgeting tips could help you get through your 60s with confidence.
A Change in Strategy
According to a 2023 survey from the Employee Benefit Research Institute, only 64 percent of workers feel very confident about having enough money to retire comfortably.1 Are you a member of this group? If not, it may be time to change your planning strategy.
Consider creating a list of your planned income streams in retirement, including any pensions, Social Security benefits, personal savings, rental property incomes, etc. Then, take a look at your outgoing expenses to see how much money you'll need every month.
Comparing the two figures could help you determine if you have enough money for your retirement. What is the difference between what you need and what you have? Seeing the numbers on paper could help you determine if a change is in order.
A Discussion of Debt
Debt could push back your retirement date — or even make it impossible for you to retire at all. The fewer financial obligations you have in retirement, the longer your financial cushion may last.
Consider going through your finances and making a list of your debt, including revolving credit card balances, auto loans, home equity lines of credit, student loans and mortgages. After adding up the monthly payments for all of your accounts, think about creating a plan to pay them off before you retire.
Working an extra year or two could help you retire debt-free. A part-time job is another option that could help you put additional funds towards your debt every month.
A Change of Scenery
As you inch closer to retirement, your wants and needs may change. Your three-bedroom house may start to feel much too big, and your expansive backyard may become more of a burden than a blessing. For some people in their 60s, the solution to this is downsizing to a smaller home.
Downsizing is one way to stash away some extra money every month, as costs for home maintenance, repairs and utilities are often less in smaller spaces. This money could be put toward your retirement savingsor other long-term savings goals.
But a house isn't the only thing you can downsize! Some retirees find that they don't need multiple vehicles — or scale back on things like cable packages, cell phone plans and other subscription services.
A Little Help
Planning for your financial future can seem daunting, but you don't have to go it alone. A financial representative can provide guidance tailored to your individual needs and goals. Whether you dream of spending retirement gardening or traveling Europe, an advisor can help create a realistic roadmap to get you there. They can review your current finances and investments to ensure you're on track to reach your objectives.
An advisor can also discuss estate planning options to help ensure your legacy aligns with your values. With customized advice and planning, you can feel confident pursuing the retirement lifestyle you envision.
The Bottom Line
Budgeting tips for your 60s aren't much different than budgeting tips for your younger years. But as life changes, needs and wants often follow suit. Determining your priorities, weeding out unnecessary expenses and focusing on your long-term goals could help you better prepare for tomorrow.
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Save, Invest, Grow Your Wealth!
Take control of your financial future by budgeting, saving, and investing wisely.
And by age 60, you should have six to 11 times your salary saved in order to be considered on track for retirement. For example, a 35-year-old earning $60,000 would be on track if she's saved about $60,000 to $90,000.
If you have a large amount of debt that you need to pay off, you can modify your percentage-based budget and follow the 60/20/20 rule. Put 60% of your income towards your needs (including debts), 20% towards your wants, and 20% towards your savings.
In the 60% solution method, you cover all your wants and needs with 60% of your budget. The other 40% is for saving. Then, that 40% gets divided up into three savings categories (10% for retirement, 10% for long-term savings, 10% for short-term savings) with 10% left for “fun.”
“With a nest egg of $100,000, that would only cover two years of expenses without considering any additional income sources like Social Security,” Ross explained. “So, while it's not impossible, it would likely require a very frugal lifestyle and additional income streams to be comfortable.”
Social Security offers a monthly benefit check to many kinds of recipients. As of December 2023, the average check is $1,767.03, according to the Social Security Administration – but that amount can differ drastically depending on the type of recipient. In fact, retirees typically make more than the overall average.
The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis.
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
60% of your income should go to expenses, 20% to savings, 10% to wants (entertainment, etc.) and the remaining 10% to giving and/or paying down debts. The largest allocation of a monthly budget is always going to be fixed expenses (mortgage, rent, car notes, utilities, insurance, etc.).
1. The zero-based budget. The concept of a zero-based budgeting method is simple: Income minus expenses equals zero. This budgeting method is best for people who have a set income each month or can reasonably estimate their monthly income.
60/40. Allocate 60% of your income for fixed expenses like your rent or mortgage and 40% for variable expenses like groceries, entertainment and travel. 30/30/40.
In the 50/20/30 budget, 50% of your net income should go to your needs, 20% should go to savings, and 30% should go to your wants. If you've read the Essentials of Budgeting, you're already familiar with the idea of wants and needs. This budget recommends a specific balance for your spending on wants and needs.
The 40/40/20 rule comes in during the saving phase of his wealth creation formula. Cardone says that from your gross income, 40% should be set aside for taxes, 40% should be saved, and you should live off of the remaining 20%.
The short answer is yes, $500,000 is enough for many retirees. The question is how that will work out for you. With an income source like Social Security, modes spending, and a bit of good luck, this is feasible. And when two people in your household get Social Security or pension income, it's even easier.
£300k in a pension isn't a huge amount to retire on at the fairly young age of 60, but it's possible for certain lifestyles depending on how your pension fund performs while you're retired and how much you need to live on.
However, not a huge percentage of retirees end up having that much money. In fact, statistically, around 10% of retirees have $1 million or more in savings.
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