Your Financial Picture at Age 70
Unlike an earlier retirement, a late-career exit at age 70 has distinct advantages and disadvantages. On the plus side, you've had more years to save, invest, and potentially pay off a mortgage. A later retirement also means a smaller number of years to fund and, crucially, a significantly larger Social Security benefit. On the other hand, a shorter runway to retirement can be a challenge for those behind on savings, and healthcare costs in retirement can be a major expense.
The first step to determining your needs is to assess your personal financial situation and goals, not compare yourself to national averages. Look closely at your expected retirement budget, potential income streams, and projected healthcare expenses.
Estimate Your Retirement Expenses
A good starting point for budgeting is the 70-80% spending rule, which suggests you'll need 70-80% of your pre-retirement income to maintain your lifestyle. However, your individual costs may differ. Some expenses may decrease, such as commuting and saving for retirement, while others, particularly healthcare and travel, may increase. Consider creating a detailed budget for your first five years of retirement, and a broader one for later years, which may include long-term care costs.
Evaluate Your Retirement Income Streams
At 70, your potential income streams may include:
- Social Security: By delaying your claim until age 70, you can receive the maximum monthly benefit, which is 132% of your full retirement age benefit. This is one of the most powerful financial moves for late-stage retirees.
- Retirement Accounts: Withdrawals from 401(k)s, 403(b)s, and IRAs will likely form a large portion of your income. Remember to plan for Required Minimum Distributions (RMDs), which begin at age 73 for most accounts.
- Pensions: If you have a pension, understand the payout options and how it fits into your overall income plan.
- Other Investments: This includes taxable brokerage accounts, rental income, or other assets.
Maximize Savings with Late-Career Strategies
If you're still working, there's still time to boost your nest egg. As a late-career saver, you can take advantage of key opportunities:
- Catch-Up Contributions: For those aged 50 or older, the IRS allows for additional “catch-up” contributions to retirement accounts. This includes an extra $7,500 for 401(k)s and $1,000 for IRAs in 2024, providing a significant boost.
- Aggressive Savings Rate: With fewer years until retirement, aim to increase your savings rate significantly. Cut unnecessary expenses and redirect those funds towards your retirement accounts.
- Strategic Investing: While nearing retirement, a conservative approach is often wise to protect principal. However, with potentially a long retirement, you still need growth to combat inflation. Diversify your investments across different asset classes to balance risk and reward.
Using the 10x Income Rule and 4% Withdrawal Rule
Financial rules of thumb, while not personalized, offer helpful benchmarks. The 10x Income Rule suggests that you should have 10 times your final pre-retirement salary saved by age 70. For example, if your final annual salary is $100,000, your savings goal would be $1 million. The 4% Withdrawal Rule is another popular guideline, suggesting you can safely withdraw 4% of your savings in your first year of retirement and adjust for inflation thereafter. This provides an estimate of the annual income your savings can generate.
Comparison of Retirement Income Scenarios
The table below illustrates how different levels of savings and Social Security benefits can translate into annual retirement income, assuming a 4% withdrawal rate from savings.
| Scenario | Savings at 70 | Social Security (Max @ 70) | 4% Annual Withdrawal | Total Potential Annual Income |
|---|---|---|---|---|
| Modest | $500,000 | $50,000 | $20,000 | $70,000 |
| Comfortable | $1,000,000 | $50,000 | $40,000 | $90,000 |
| Affluent | $2,000,000 | $50,000 | $80,000 | $130,000 |
Note: Assumes a single, high-earning individual retiring at age 70. Social Security benefits can vary widely based on your earnings history. This table is for illustrative purposes only.
Addressing Healthcare and Inflation
Healthcare expenses are a significant and often underestimated cost. In 2024, a 65-year-old couple can expect to spend an average of $330,000 on healthcare throughout retirement. Planning for these costs is crucial. Medicare provides a baseline, but you may need to budget for supplemental insurance, dental, vision, hearing, and long-term care. An HSA (Health Savings Account), if you have a high-deductible health plan, offers a triple tax advantage that can be used for medical expenses in retirement.
Inflation is another powerful force that erodes purchasing power. A diversified investment portfolio that includes growth-oriented assets like stocks can help your savings keep pace. Remember that Social Security benefits have cost-of-living adjustments (COLAs), but other fixed income sources may not.
Conclusion: Your Roadmap to Retirement at 70
The question of how much money you should have when you retire at 70 has no single, simple answer. It depends on a personalized assessment of your needs, potential income, and willingness to manage your finances actively. By leveraging your later retirement to maximize Social Security, making use of catch-up contributions, and realistically budgeting for healthcare and inflation, you can build a secure and comfortable future.
If you find yourself needing more assistance, it may be beneficial to connect with a qualified financial advisor to create a customized plan based on your unique situation. For information on local services for older adults, consider using the Eldercare Locator provided by the Administration for Community Living.
