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How to Invest in Your 60s (and Beyond) for a Wealthy Retirement


Feel financially ready to retire?

You’re in the home stretch, with retirement in sight. But if that gives you more anxiety than euphoria, you still have plenty of control over how you prepare and transition to life after full-time work. 

How to Invest in Your 60s (and Beyond)

By your 60s, you’ve already achieved plenty of financial milestones in your adult life. But while not everyone shares the same financial goals in their 30s and 40s, everyone must plan for retirement. 

As you review your personal finances and investments, stick to the following fundamentals. 


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1. Review Your Retirement Plan

Start by answering a simple question: When do you want to retire?

Ideally, you want to save up a nest egg of around 25 times your annual living expenses, if you’re following the 4% Rule. The rule states that if you pull out 4% of your nest egg in the first year of retirement, and only increase that amount by the inflation rate each year thereafter, your nest egg should last at least 30 years. 

Although the 4% Rule isn’t written in stone as a commandment, it’s a useful rule of thumb for the average investor. 

With a target nest egg in mind, you have a sense for how far you have to go — and what it will take to close the gap. If necessary, start cutting your living expenses now to boost your savings rate and invest more of each paycheck. 

Depending on how far you have to go, you may need to work longer to reach your target nest egg. But that’s not all bad news because it also means you can delay taking Social Security benefits. That in turn means higher benefits once you do start taking them. 

Working longer doesn’t have to mean staying at your current high-stress day job though. Consider switching to a post-career job, whether flexible gig work that you do on your own terms, a fulfilling job that makes the world a better place, or simply fun and laid-back work that you enjoy. You could work full- or part-time, for a nonprofit charity or for-profit company. 

For a few ideas to get your wheels turning, check out a few post-retirement job options. Start thinking outside the proverbial box, and looking for alternative ways to earn money that suit your ideal lifestyle better.

2. Don’t Stop Investing

Just because you’re years rather than decades from retirement doesn’t mean you should stop investing. You still want to put every dollar possible to work, earning compound interest for you. 

Otherwise your savings will lose money to inflation each year — not exactly the direction you’re trying to travel. 

Granted, you don’t have the same tolerance for risk that your children do. You shouldn’t necessarily chase huge returns on risky tech startups and venture capital funds. Instead, you want to start thinking about building reliable passive income streams.

3. Focus on Low-Risk Investments

Low-risk investments don’t have to yield low returns. But you do need to start thinking more defensively about your retirement funds. 

Consider these options as you explore lower-risk and more income-oriented investments.

High Dividend Stocks

As you near or enter retirement, you still want plenty of stocks in your investment portfolio. Just not necessarily the same stocks that you had when you were 30. 

Start focusing on established, blue chip companies with healthy cash flow. Fortunately, these are precisely the kinds of companies that pay high dividends.

Don’t worry about picking individual companies. Instead, just focus on buying mutual funds or exchange-traded funds (ETFs) that own large, stable companies with high dividend yields. In many cases you can earn a 4% dividend yield, and not have to sell off a single stock each year to collect that target 4% withdrawal rate. 

I-Bonds & TIPS

With post-pandemic inflation raging, every investor wants to protect their portfolio against inflation without adding recession risk. Fortunately, you have two incredibly safe options to do so, both backed by Uncle Sam himself. 

The first is Treasury inflation-protected securities or TIPS. These specialized Treasury bonds adjust in face value each year based on the inflation rate.

You can also invest in I-bonds, which work similarly but come with some restrictions. Each American adult can only buy $10,000 of them each year, and you can’t sell them within a year of buying. If you sell within five years, the Treasury hits you with a penalty equal to the last three months’ interest. 

But where else can you earn 9.6% returns in mid-2022, guaranteed by the U.S. Treasury?

Read up on other inflation hedges for more ideas to combat the “I” word. 

Municipal & Corporate Bonds

As mainstream retirement investments, much has been written about municipal bonds and corporate bonds. So I won’t belabor the point, but you can earn steady returns with modest risk on these old-school investments. 

Indirect Real Estate Investments

Real estate offers diversification and sources of passive income independent of the stock market.

And no, you don’t need to become a landlord to collect income from real estate. You can invest indirectly with publicly-traded real estate investment trusts (REITs) through your brokerage account, which tend to pay high dividend yields.

For even more diversification, consider real estate crowdfunding platforms. These tend to be long-term, income-oriented investments, and they are regulated by the SEC. A few of my favorites for strong returns and moderate risk include Fundrise, Streitwise, Groundfloor, and Concreit

Although you may not invest a huge portion of your portfolio in real estate, it still offers a great option for diversifying and adding streams of passive income. 

Pay Off Debts

The safest investment you can possibly make is paying off a debt early. You earn a “guaranteed” return equal to the interest rate you’d have otherwise paid. 

If you still have any unsecured debts, such as credit card balances or personal loans, prioritize paying them off immediately. You can also consider paying off auto loans or your home mortgage early to reduce your living expenses both now and in retirement. 

Remember, the lower your living expenses in retirement, the smaller the nest egg you need to cover it.

Annuities

You can also buy yourself a pension if you like, in the form of annuities.

These tend to be bad investments from a returns perspective, but they help some retirees sleep at night. Before spending any money on annuities, speak with at least one financial advisor about it. You may be better off investing in a mix of high-dividend ETFs, bonds, and real estate.

4. Continue Making Catch-Up Retirement Contributions

While you’re still working, keep plowing money into your tax-sheltered retirement accounts.

That includes your Roth or traditional IRA, of course. You can contribute an extra $1,000 each year as an adult over age 50. 

But where you can really catch up is your employer-sponsored retirement plan. Older employees with access to a 401(k), 403(b), or federal Thrift Savings Plan (TSP) can contribute an extra $6,500 in 2022, on top of the standard $20,500, for a total of $27,000 per year. 

You can also consider using a health savings account (HSA) as a secondary retirement account. It offers the best tax benefits of any tax-sheltered account, and you’ll have no shortage of healthcare expenses in retirement. 

Take advantage of these tax-sheltered accounts while you can, to minimize Uncle Sam’s take. 

5. Take Required Minimum Distributions (RMDs)

When you reach age 70 ½, you need to start pulling money out of your IRA and 401(k) or similar employer retirement account. The amount you have to withdraw is based on your account balance, your age, and the age of your spouse if you’re married.

Fail to take these required minimum distributions (RMDs) and the IRS hits you with nasty penalties. Just how nasty? A full 50% of the amount you should have withdrawn but didn’t. Ouch. 

Whether you’re following the 4% Rule or any other method to determine how much to withdraw each year, make sure you’re withdrawing at least the minimum required from your tax-deferred retirement accounts. 

Note that you don’t have to take RMDs from taxable brokerage accounts or from Roth retirement accounts. That includes Roth IRAs, Roth 401(k)s and similar employer-sponsored retirement accounts. It’s one of many reasons I prefer Roth retirement accounts over traditional accounts. 


Investing in Your 60s & Beyond FAQs

Planning for retirement gets both more tangible and more complicated the closer you get to the finish line. You probably have plenty of questions about it.

Here are a few of the most common investing questions among 60-somethings, to set your mind at ease. 

Is It Too Late to Start Investing in Your 60s?

Although you should definitely consider yourself on the catch-up plan, “better late than never” applies here. 

If you don’t have anything saved for retirement, you need to double down on investing, and right now. You probably need to slash your living expenses to the bare minimum for survival, then cut some more. And every spare penny needs to go toward investments. 

You don’t have the luxury of low-risk, low-return investments either. To make up ground, consider investing more aggressively rather than less, to maximize your odds of reaching your target nest egg on time. 

Take a look at sample numbers for how much you need to save for retirement to reach your target nest egg. 

What’s the Best Investment Strategy for People Ages 60+?

There’s no one-size-fits-all investment advice for everyone. But as a general rule, you want to invest as much as possible through your tax-advantaged retirement accounts, buying relatively low-risk investments. 

Your asset allocation should shift away from growth stocks such as tech companies and small-cap stocks, and toward larger, more established companies paying strong dividends. Bonds should make up a higher percentage of your portfolio than in your younger years. 

Sit down with an investment advisor to come up with an ideal portfolio allocation.

Do I Need to Pay Someone to Manage My Portfolio?

It helps to get expert advice as you approach and enter retirement. But that doesn’t mean you have to pay someone a percentage of your portfolio every year to manage your assets. 

Consider paying an investment advisor by the hour for their advice. You probably only need a few hours of their time to get their feedback on how much of your money should be in which investments. 

Other flat-fee advisors charge a small, flat monthly fee. For example, you can upgrade from Charles Schwab’s free robo-advisor service to get expert financial advice whenever you need it, for $30 per month. 

How Much Money Should You Have Saved by Your 60s?

As a general rule of thumb, many financial planners recommend having eight times your annual salary in retirement savings by the time you turn 60. 

But that ignores the difference between your income and your living expenses. Some people spend far less than they earn, so their salary makes a poor proxy for how much they’ll need in retirement. 

The 4% Rule makes a better rule of thumb: in order to retire, set aside 25 times your expected annual spending in retirement. Remember that you can dramatically lower your cost of living by moving — you can live anywhere in the world after you ditch your day job. 

How Many Streams of Income Do You Need in Retirement?

The more diverse your retirement income, the better. Diversification protects you from crashes in one sector of the market or economy. 

That can include a wide range of high-yield ETFs, a broad blend of different types of bonds, a mix of real estate investments, and possibly an annuity. Don’t forget you’ll also collect some income from Social Security as well. 

You can also leave some money in growth stocks and plan on selling off a small portion of them each year — or at least in years when the stock market goes up.

Don’t ignore the option to keep working after you retire from your career job, either. Find something fun to fill your time in retirement that happens to also generate some income. Explore the notion of “barista FIRE” to think creatively about your post-retirement budget. 

All of these income sources combine to create monthly cash flow that doesn’t depend too heavily on any one type of investment performing well. 


Final Word

Your golden years should be fun, not stressful. If you worry about the ideal asset allocation or a market downturn, sit down with a financial advisor to talk through your needs and financial future. 

Read up on the best low-risk investments as you near retirement to build your comfort level. Aim for a broad, diverse mix of income sources to keep the tap flowing even when the market falls sputters. 

Most of all, keep investing as much as you possibly can while you’re still working. The more money you have when you hang up your hat, the more options you’ll have for living your perfect lifestyle in retirement. 



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