6 Ways To Build Wealth in Your 60s

Retirement is nearing, so you’re trying to get your finances in order. If you weren’t already, now is the time to get laser focused on saving for your golden years.

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To be financially prepared for retirement, you should have eight times your annual salary saved by age 60, according to Fidelity. This number should rise to 10 times your annual salary by age 67.

However, this isn’t a reality for many people. For example, 13% of Americans age 60-plus have zero retirement savings, according to a PwC report.

Overall, the median retirement savings for 55- to 64-year-olds is $120,000, according to the report. This would likely provide less than $1,000 per month over a 15-year retirement.

If you still have some work — or a lot of work — to do before retiring, you’re clearly not alone. Here are six tips to build wealth in your 60s, so you can feel more financially prepared for retirement.

1. Max Out Your Retirement Accounts

“Your 50s and 60s mark the beginning of the ‘stretch run’ toward retirement for many people,” said Paul Deer, CFP, vice president of wealth, private client at Empower. “With the time window for building net worth during the wealth accumulation stage shrinking as retirement draws closer, the most important net worth building step for people in their 50s and 60s is to max out their retirement accounts.”

He said it’s also important to avoid taking early withdrawals from your retirement accounts, viewing them like a pension instead.

“People working toward a pension tend to forget about it until they retire,” he said. “While that money is locked up until later in life, it becomes a hugely powerful resource in retirement.”

2. Time the Start of Social Security Benefits Right

When you start taking Social Security benefits matters. You can apply anytime between age 62-70, but the longer you wait to apply, the higher your monthly payment will be.

Carefully examine the cost-benefit of claiming them as early as age 62, as late as age 70 or somewhere in between, said Chris Urban, CFP, founder at Discovery Wealth Planning.

“There is a tax element to this decision as well, so this could also be included as part of smart tax planning,” he said.

3. Earn Extra Income

In recent years, it has become more popular to take on some type of employment during retirement, Urban said.

“Retirement these days is more of a ‘work-optional’ phase of life,” he said. “Many people enjoy the social interaction that work provides.”

This might involve getting a regular part-time job or joining the gig economy — for example, by becoming an Uber driver or pet sitter.

“Any additional income could also reduce the amount you would need to draw down from your retirement [and/or] investment accounts to fund your lifestyle,” he said.

4. Understand Fees

Your money is likely going toward a variety of fees, so it’s important to know exactly how much you’re paying and what you’re paying for, Urban said.

“Understand the fees you are paying to any professional(s) that you may work with and the value you are getting in return to make sure this is a relationship worth keeping,” he said. “This could be a lawyer, accountant, financial advisor, etc.”

He said you also need to understand the fees embedded into mutual funds and/or exchange-traded funds in your retirement or investment accounts.

“Many people have no idea these exist,” he said. “Pay close attention to understand the dollar impact of these fees on your portfolio, especially over prolonged periods of time.”

5. Avoid Volatility — Especially Losses

Investing has its ups and downs, but your 60s isn’t a time to take on a ton of risk.

“Don’t chase average gains, but instead, focus on real returns and investment vehicles that maximize returns,” said Kelly Gilbert, owner and principal fiduciary advisor at EFG Financial. “Rate of return and average gain are two different things, and when you retire, all you can spend is rate of return.”

He illustrated his point to provide further clarity.

“For instance, if you lost 50% in year one and then had a gain of 50% in year two, your average gain is zero percent,” he said. “But your rate of return is -25% because the gain was on a lower amount in year two.”

If this is news to you, you’re not alone.

“Unfortunately, most 60-year-olds are unaware of this and fall prey to stock marketers selling high average gain projections instead of actual returns,” he said.

6. Don’t Be Too Cautious

Taking big risks with your money is unwise in your 60s, but that doesn’t mean you should just sit on your funds.

“Although you want to avoid volatility, do not be too cautious,” Gilbert said. “Your gains must outpace inflation or else you are losing money every year.”

Losing money is the opposite of what you want, so you need to set a baseline annual target rate of return to ensure your funds are keeping pace with the economy.

“Today that target is a 4% annual rate of return just to keep up,” he said. “If your savings are earning less than that each year, you are losing money instead of saving.”

Ultimately, building wealth in your 60s may require a lot discipline and some sacrifice. However, you won’t regret putting in the work now, so you can enjoy greater relaxation in your golden years.

This article originally appeared on GOBankingRates.com: 6 Ways To Build Wealth in Your 60s