Money After 70: Financial Opportunities and Challenges-Part 1

I am currently creating a new Money After 70 course for older adults. Below is a brief summary of 10 changes, opportunities, and challenges for septuagenarians (people aged 70 to 79):

Social Security Benefits- Older adults should claim Social Security at or before age 70. After age 70, monthly benefits stop increasing, even if people continue delaying benefits. At age 70, workers receive 132% of their full retirement age benefit with delayed retirement credits added.

 

Qualified Charitable Distributions (QCDs)- Persons aged 70½+ can make QCDs from a traditional IRA directly to a qualified charity. The QCD counts as a RMD withdrawal for the year the donation is made and removes the donated amount from taxable income calculations.

 

Required Minimum Distributions (RMDs)- Mandatory formula-based withdrawals from tax-deferred plans must begin at age 73 for taxpayers born in 1951-1959 and at age 75 if born in 1960 or later. Income taxes are due on pretax saving contributions and retirement plan earnings.

 

Portfolio Longevity- A decade into retirement, especially during market downturns, 70+ adults may be concerned about making their money last a lifetime. Spending patterns, lifestyles, and goals may also change. To “stretch” assets, prior cash withdrawal methods may need tweaking.

 

Young Old to Old- Geriatricians often refer to three stages of later life: young old (ages 65-74), old (ages 75-84), and old old (age 85+). Others call these go-go, slow-go, and no-go phases. Both descriptions acknowledge movement during one’s 70s to a new stage of aging.

 

Accelerated Bucket List Completion- In their 70s, people start to wonder how many “good years” they have left with the vitality and mobility to achieve long-awaited travel plans and other goals. Some try to pack in as much as they can in their late go-go and early slow-go years.

 

Legacy and Charity- The older people get, the more the phrase “you can’t take it with you” rings true, especially when a financial advisor projects they will likely never run out of money.

Some people who have been “lukewarm” donors during their working years “step it up” after age 70 after realizing they have more than enough money to meet their own financial needs.

 

New Expenses- If these items have not yet already been purchased, people in their 70s often spend money for the first time on items such as hearing aids, walkers, wheelchairs, and dentures as well as services such lawn care, home care and, perhaps, long-term care.

 

Widowhood and Solo Aging- As married couples reach their 70s, the chance of widowhood increases, thereby leaving a surviving spouse who, if the couple had no children, is also a solo ager. Widowhood has many financial implications for housing and budgeting decisions.

 

Income Taxes- Some older adults have multiple streams of income, especially after RMDs begin. This can result in higher tax bills in their 70s than they paid previously and, perhaps, a higher marginal tax bracket. Taxes can increase also when a surviving spouse must file as a single taxpayer. This can trigger taxes on Social Security, for IRMAA premiums, and more.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.