Best Retirement Portfolio for 60 Year-Old

If you are between 55 years old to 64 years old, there is still time for you to enhance your retirement savings. Having an enough amount of money saved can make differences, whether you are planning to retire early, late, or never retire at all. It is never too early to begin saving, especially for preparing for retirement. For those of you who start preparing your retirement, here is the best retirement portfolio for 60 year-old tips that you can follow.

Retirement Savings Tips for 60 Year-Olds

Consider Adding an Individual Retirement Account (IRA)

If your employer does not provide a 401(k) plan or if you already fund yours to the max, you should consider adding an IRA or Individual Retirement Account. The maximum amount you can contribute to this retirement investing option in 2021 and 2022 is $6,000. And another $1,000 if you are 50 years old or older. Individual Retirement Accounts are available in 2 options, which are traditional IRAs and Roth IRAs.

If you choose the traditional IRA, the money you contribute to your account is typically tax-deductible upfront. And if you go for the Roth IRA, you will obtain your tax break at the other end in the form of tax-free withdrawals. Keep in mind that each type of IRA has different rules about contribution limits.

Rethink Your 401(k) Allocations

The next tip for the best retirement portfolio for 60 year-old is rethinking your 401(k) allocations, if you have one (read: 401k Investment Strategy by Age). Conventional financial wisdom states that you should invest more conservatively when you are getting older. You should contribute a bigger amount of money into bonds and less into stocks. It is because if your stocks fall into a prolonged bear market, you will not have many years waiting for the prices to recover.

Or worse, you might need to sell your stocks at loss. It should be a matter of personal preferences when it comes to how conservative you should be. However, some financial experts would suggest selling all your stock investments and switching totally into bonds, no matter your age. Stocks still offer growth potential and a hedge against inflation, which bonds do not. The point is, you are suggested to stay diversified in both bonds and stocks. But in a way that fits your age.

For instance, a conservative portfolio perhaps consists of 70 percent to 75 percent of bonds, 15 percent to 20 percent of stocks, and 5 percent to 15 percent in cash or cash equivalents. If you are still contributing your 401(k) money in the same amount you chose when you are 30 years old or 40 years old now, it is time to pay close attention and consider whether your allocation is still proper or not since you are going closer to the retirement age.

One of today’s practical options, mostly offered by many plans is target-date funds. These automatically adjust their asset allocations when the year you plan to retire comes closer. But keep in mind that target-date funds probably have greater fees. Therefore, you should choose carefully.