I’m 60 years old and single. I’m scared to blow money away with an IRA and ruin my retirement. How can I prevent that from happening?
Individual Retirement Accounts (IRAs) are the standard retirement savings tool that is very popular in the United States. According to Investment Company Institutereported that 55.5 million US households (approximately 42% of households nationwide) had an IRA in 2023.
IRA While there is no doubt that it will play a key role for the millions of Americans preparing for retirement, what many don’t realize is that IRAs are not a set-and-forget type investment. In fact, if you have an IRA and don’t know how to properly manage it, you can set yourself up for financial losses in the long run.
Unlike 401 (k) accountIRA gives you a lot of flexibility. You can invest in virtually anything in what you like and open accounts at a huge number of different brokerages and financial institutions.
This flexibility can be both a blessing and a curse. Good management of your IRA will allow you to grow savings in a substantial nest egg.
So let’s say you’re in your 60s and you’re wondering what to do with your IRA. Your late spouse, who died, was caring for your collective investment, but it is your responsibility to manage your IRA. Your bank recently sent you an email asking how you would like to invest your funds in your IRA, and you don’t know what to do.
The good news is that there are some proven strategies you can use to get the most out of your IRA, as well as some mistakes to avoid.
One of the biggest mistakes to avoid is to withdraw money early. If you take money from your IRA before the age of 59½, you will be charged if you do not fall under a limited number of exceptions. 10% penalty Regarding the withdrawn funds.
Additionally, you also miss out on all the profits that the invested funds may have earned from the time of withdrawal until you retire. For example, if you withdraw $5,000 from your IRA at age 50, that money would have changed to $18,500.09 by age 67. This assumes an average average annual return on investment (ROI) if you leave $5K in your IRA.
On the other side, once you reach the age of 73, you need to start getting the minimum distribution (RMD) you need. This is the minimum amount that you must withdraw from your account each year.
Failure to take away RMD could lead to a penalty equal to 25% of the amount to be withdrawn (though this could be reduced to a 10% penalty if the error is fixed within two years). With this in mind, you’ll want to make sure you follow RMD IRS Guidelines.
Finally, it’s a big error trying to avoid investing in the wrong assets as well. This can happen if you can throw money into your investment at a high rate and eat a significant amount of money into your return, or if you have the wrong combination of assets in your portfolio. For example, if you start withdrawing from the IRA because you are approaching retirement, you will be selling stocks at bad times and end up losing money.
One of the tried and true methods for calculating the percentage of portfolios that need to be invested in stocks is The 110 Rulessimply take 110 and subtract your age. The rest represents the percentage of the portfolio that should be invested in stocks. You are 60 years old, so you can take 110 and deduct your age. This gives a value of 50. This means that around 50% of your portfolio must invest in stocks.
By avoiding these errors, you can ensure that your retirement doesn’t take a hit that puts you at risk of financial insecurity.
Just as there are mistakes to avoid, there are also moves you can make with an IRA that can increase your chances of having enough money to meet you through retirement.
For one thing, we need to try to make the most of our contributions each year. In 2025, you are permitted to contribute $7,000 If you are under 50, you can also add a catch-up contribution of $1,000 for an IRA, while older Americans can add a total of $8,000. The more you can make the most of your annual contribution, the more you need to grow your money so that you can benefit from compound interest benefits.
You also need to make sure you invest in the right type of IRA. a Traditional IRA Contributions to pre-tax dollars (though potentially reducing tax liability) are subject to taxes and RMD rules apply.
If you invest in Roth Irayou cannot deduct your contributions, but you are also not exposed to RMD and can make tax-free withdrawals. If you think your taxes will be higher for a retiree, a Ross IRA might be a great option for you.
If you already have a traditional IRA but are worried that you have to receive money when you don’t need it, and paying taxes when you do may also want to consider Loss conversion.
Roth Conversion is a taxable event that transfers funds from pre-tax retirement accounts such as traditional IRAs to the Roth IRA. However, there is a five-year holding period of withdrawal, including money, which is part of Loss’ conversion. In other words, if you are expecting to need money remodeled within that five-year timeframe near retirement, we recommend rethinking this option.
Finally, it is also very important to periodically recalibrate your portfolio to ensure a diverse mix of assets and a level of exposure to risks that are appropriate for your age. If you don’t know how to do that, or if you are discussing whether Loss conversion is right for you, your financial advisor can make those choices and provide invaluable help in ensuring financial stability for your retirement.
This article is for informational purposes only and should not be construed as advice. It is provided without warranty of any kind.
