By Jeremy Wallace and Andrew Hart
Turning 70? Happy birthday and congrats on becoming a septuagenarian (i.e., someone in their 70s)! Did you know that Benjamin Franklin was 70 when he helped found the United States? (1) Or that Winston Churchill was 70 years old when he led the United Kingdom to victory in World War II? (2) Or how about that actress Helen Hayes won her second Oscar when she was 70? (3) Despite everything you’ve already experienced and accomplished, your best years could still be ahead!
Now past the early transition years of retired life, you’re settling into a well-deserved new chapter in life. Your idea of a happy retirement may include many things—traveling, visiting family and friends, relaxing, or even continuing to work—but worrying about your finances is likely not one of them. That doesn’t diminish the importance of checking in on your financial plan, however. In fact, it makes it that much more significant, especially at key chapters in life, because the confidence you gain from knowing your finances are on track will help you enjoy retired life to the fullest. Let’s go through this short list of questions to ask yourself to see how turning 70 may affect your financial plan and what you can do about it.
Are You Receiving Social Security Benefits?
There is no exact right age to start receiving Social Security benefits, and many retirees choose to maximize their monthly benefits by delaying them until age 70. If you’ve been waiting to take Social Security to optimize your benefits, wait no longer. Your benefits won’t increase after age 70, and the longer you wait to enroll, the more money you’ll miss out on. Head to the Social Security Administration’s website to apply online.
Has your 70th birthday already passed? That’s okay. The Social Security Administration will pay you retroactive benefits for up to 6 months after your birthday.
Do You Have a Withdrawal Plan in Place?
If your 70th birthday is July 1, 2019, or later, you’ll need to start taking required minimum distributions (RMDs) from tax-advantaged retirement plans when you reach 72. (4) Because your taxable income will include those withdrawals, now is an excellent time to create or review your withdrawal strategy with tax efficiency in mind.
As you approach age 72, make sure to set up your RMDs to receive your first distribution by April 1st of the year following your 72nd birthday and by December 31st every year after. Making any mistakes with RMDs as far as when, how much, and from which account you withdraw, even if unintentional, may incur stiff penalties on top of having to catch up on any distributions you missed.
Does Your Investment Portfolio Need a Tune-Up?
As we enter new life chapters, our lifestyle goals, financial needs, and risk tolerance shift accordingly, making it essential to review your portfolio regularly. In the early years of retirement, you’re spending down your assets but still need them to last another 20 years or so.
The goal is for your assets to last the rest of your lifetime, and to do that, it’s important to balance growth and capital preservation appropriately. Shifting your asset allocation to a more conservative portfolio to minimize risk may sacrifice the growth potential necessary to beat inflation. On the other hand, tilting the balance toward more growth to take advantage of potential returns may be taking on unnecessary risk.
When Was the Last Time You Reviewed Your Estate Plan?
The first chapter of retirement is also a great time to review your estate plan and consider your legacy goals. Estate planning is valuable for most situations and most people, regardless of their level of wealth, if only to make it easier for family members and loved ones. With your estate attorney, review all aspects of your estate plan and update it if needed. The process includes:
- Organizing all your important legal documents
- Checking beneficiary designations
- Identifying your legacy wishes
- Determining tax optimization strategies
Make sure to share your wishes and the location of important documents with your family to make it easier for them to act on your behalf and avoid any legal headaches.
We Are Here to Help
No matter what your 70s bring—new hobbies, adventures, or longer visits with family—we at Wallace Hart Capital Management believe that extraordinary lives require a different approach to capital management. We’d be proud to help take care of the financial aspects of your retirement so you can focus on reaping the rewards of your years of hard work, and help you discover what your life can be.
If you’ve recently retired and want to ensure your finances are set up to carry you through your golden years, we’d love to help. To see if our services are the right fit for you, contact us at 859.300.3030 or request an appointment online today!
Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.
Andrew Hart is co-founder and chief planning strategist at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Andrew has 15 years of experience in the financial industry and strives to provide new and better strategies and processes to improve his clients’ lives. Andrew graduated from Wittenberg University with a bachelor’s degree in business management and holds a certificate in financial planning from Georgetown University and the CERTIFIED FINANCIAL PLANNER™ (CFP®) designation. When he’s not working, you can find him enjoying the city of Lexington, Kentucky, teaching at the University of Kentucky’s Financial Planning program, and spending time with his wife, Susan, twin sons, George and Ted, and daughters, Merritt and Philippa. To learn more about Andrew, connect with him on LinkedIn.