What Should You Do with $170K in Retirement Savings? A 68-Year-Old’s Guide to Financial Planning

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Retirement can be both exciting and overwhelming, especially when you’re 68 with $170,000 in savings, a paid-off home, and no car payments. While it might feel like your nest egg isn’t enough, you might be surprised at how far it can go with the right planning.

So, where should you go from here? Is hiring a financial advisor worth it? The good news is that with careful financial planning and some smart decisions, you can stretch your savings further and feel confident in your retirement strategy.

In this guide, I’ll walk you through how to optimise your retirement savings, how to determine if you need a financial planner, and why you don’t need millions to enjoy a comfortable life in retirement.


Understanding Your Situation: The Foundation of Smart Retirement Planning

When you’re retired, having $170,000 in savings sounds like a solid foundation—but it’s only part of the picture. The first step is to assess your financial situation carefully.

Key considerations:

  • Income sources: Do you have Social Security benefits, pensions, or other income sources? Knowing how much money you’ll get regularly is crucial.
  • Monthly expenses: What are your living costs? This includes everything from healthcare to groceries and utilities.
  • Withdrawal rate: How much can you safely withdraw each year without depleting your savings too quickly?

The rule of thumb for a safe withdrawal rate is around 4% per year. With $170,000 in savings, this means you could expect to withdraw about $6,800 per year ($170,000 x 4%). However, your personal situation may require adjustments.


Is $170,000 Enough for Retirement?

When you have a paid-off home and no car payments, your financial situation looks much better than it first seems. Many retirees with substantial monthly expenses or outstanding debt can find themselves struggling.

Since you don’t have these worries, your $170,000 in savings could last a lot longer, depending on how you manage it.

However, you’ll need to carefully review your monthly budget. Here’s how you can approach it:

  1. Estimate your monthly expenses: Write down all recurring expenses—utilities, groceries, insurance, transportation, and healthcare costs.
  2. Subtract your income: Include Social Security, pensions, or any other income sources you have.
  3. Determine your savings gap: If your monthly expenses exceed your income, you may need to dip into your savings.

If you find that your retirement income is insufficient to cover expenses, this is where a financial planner could make a big difference in helping you find ways to make your savings stretch.


Do You Need a Financial Planner?

If you’re asking, “Is it worth paying for a financial planner?”, you’re not alone. Many people in your situation wonder if their savings are enough to justify the cost of professional advice. Here’s the truth: it depends.

A certified financial planner (CFP) can offer valuable services like:

  • Helping you maximise your Social Security benefits
  • Developing a tax-efficient strategy
  • Managing your investments and ensuring your portfolio aligns with your risk tolerance
  • Offering advice on estate planning and healthcare

Pros of hiring a financial planner:

  • Expertise in maximising the value of your current savings
  • Knowledge of complex tax rules, particularly for retirees
  • Ongoing guidance to ensure you don’t make costly mistakes

Cons:

  • High fees, especially if you have a smaller nest egg
  • Some planners may push you toward expensive financial products that don’t align with your needs

How Much Does a Financial Planner Cost?

The cost of a financial planner varies based on your needs and how the advisor charges:

  • Hourly rates: Some advisors charge between $150 to $450 per hour.
  • Flat fees: A one-time planning session or a full retirement plan could range from $1,500 to $7,000, depending on the complexity of your situation.
  • Assets under management (AUM): If your advisor works on an AUM basis, they typically charge 1% annually, though this may be a higher-cost option if your portfolio is smaller.

A fee-only financial planner may be your best option if you don’t want to pay ongoing management fees. These professionals tend to charge either hourly or flat rates, allowing you to pay only for the services you need.


DIY Financial Planning: Can You Do It Yourself?

If you feel confident about handling your own finances, you may not need a full-time planner. Many people opt for a more DIY approach to retirement planning, and there are tools available that make it easier:

  • Budgeting apps: Use apps to track income and expenses. This will help you stay on top of your spending.
  • Retirement calculators: There are plenty of online tools that can help you figure out how long your savings will last based on your current spending habits.
  • Social Security optimisers: These tools help you determine the best time to start receiving Social Security to maximise your benefits.

However, even with these tools, it can still be valuable to get an expert’s opinion. Sometimes, just a one-time consultation with a financial planner can help you build a more secure strategy.


Key Steps to Maximise Your Retirement Savings

Whether you choose to hire an expert or go it alone, these steps can help you make the most of your $170,000 in savings:

  1. Prioritise low-cost, low-risk investments: If you’re near or in retirement, the last thing you want is a volatile portfolio. Focus on stable investments like bonds and index funds.
  2. Consider downsizing: If your home is large and costly to maintain, downsizing could free up extra funds and reduce your monthly expenses.
  3. Maximise Social Security: Wait until you reach 70 to claim Social Security, if possible, to increase your benefits.
  4. Health insurance: Ensure you have a good Medicare plan and look into any additional coverage that might protect you from high healthcare costs.

Conclusion: How to Move Forward with $170,000 in Retirement Savings

Having $170,000 in savings at 68 is not ideal by many standards, but with the right planning, it can be enough to live comfortably in retirement. The key is to manage your expenses, consider low-cost professional advice if needed, and focus on preserving your savings while maximising your income sources.

You don’t have to be wealthy to retire well, but you do need a solid plan. Whether you choose to work with a certified financial planner or take a DIY approach, the most important thing is that you have a strategy that works for your unique situation.


Relevant Links for Further Reading:

  1. Maximising Your Social Security Benefits
  2. Understanding the Basics of Retirement Withdrawals
  3. How to Find a Fee-Only Financial Planner
  4. Downsizing for Retirement: What You Need to Know
  5. Social Security Benefits Optimisation Tools

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