What Is Good Retirement Advice for 60-Year-Olds?

Executive Summary

Good retirement considerations for 60-year-olds comes down to three decisions: where your health insurance will come from until Medicare starts at 65, when to claim Social Security, and how to use the income valley (the low-income years between retiring and starting Social Security and required minimum distributions) for Roth conversions. Getting these three right protects your savings and can lower your lifetime taxes.

At 60, you are close enough to retirement that your choices now carry real weight, and early enough that you still have room to adjust. The questions below are the ones we hear most often from people in this stage of life, answered directly.

At Oak Road Wealth Management, a fee-only fiduciary financial planning firm in Lee's Summit, Missouri, serving clients nationally, we build retirement income plans around these three considerations.

How Should a 60-Year-Old Plan for Health Insurance in Retirement?

A 60-year-old should decide where health insurance will come from every year between retirement and age 65, because Medicare does not start until 65. If you retire at 62, that is three years of coverage you must arrange yourself.

Healthcare is often the biggest unknown in an early retirement plan, and the cost of getting it wrong is high. A single gap in coverage or an unexpectedly expensive plan can strain a retirement budget built on careful assumptions.

What Are Your Health Insurance Options If You Retire Before 65?

You have three main options if you retire before Medicare eligibility:

1. Your spouse's employer plan. If your spouse is still working and has coverage, joining their plan is often the simplest and most affordable route.
2. Marketplace (ACA) health insurance. You can buy a plan through HealthCare.gov or your state exchange. Premiums depend on your age, location, and plan, and you may qualify for premium tax credits based on your income.
3. COBRA continuation coverage. COBRA lets you keep your employer plan for a limited time after leaving a job, but you pay the full premium plus an administrative fee, so it is usually a short-term bridge.

The right choice depends on cost, doctor and hospital networks, and your expected income. This is where healthcare planning and tax planning overlap: because marketplace subsidies are based on income, the amount you withdraw or convert in those years can change what you pay for coverage.

What Changes at Age 65 With Medicare?

Medicare becomes available at 65, and for most people it is the default plan for retirement health coverage. Your Initial Enrollment Period runs for seven months around your 65th birthday, and missing it can lead to permanent late-enrollment penalties on Part B and Part D.

Medicare also adds a new variable to plan for: income-related premiums. Higher-income retirees pay more for Part B and Part D through IRMAA (Income-Related Monthly Adjustment Amount), which is based on your tax return from two years earlier. We keep this in mind when we plan withdrawals and Roth conversions.

When Should a 60-Year-Old Claim Social Security?

There is no single best age to claim Social Security. Delaying generally produces the highest lifetime benefit if you live a long life, but it is only the right choice if you can afford the income gap it creates. The decision has a spreadsheet side and a behavioral side, and a good plan weighs both.

How Does Social Security Work?

Social Security pays a monthly benefit based on your 35 highest-earning years. You can claim as early as 62, but your benefit is permanently reduced if you claim before your full retirement age. For anyone born in 1960 or later, full retirement age is 67.

For each year you delay past full retirement age, up to age 70, your benefit grows by about 8%. For someone with a full retirement age of 67, claiming at 62 means roughly a 30% smaller check for life, while waiting until 70 means roughly a 24% larger one. Your benefit also receives annual cost-of-living adjustments, so the starting amount compounds over time.

What Is the Spreadsheet Choice for Social Security?

The spreadsheet choice is the claiming age that maximizes total lifetime benefits based on how long you expect to live. If you expect a long life, delaying Social Security generally yields the highest lifetime benefit. Because the monthly check is larger and is adjusted for inflation, it works like inflation-protected longevity insurance, which matters most if you live into your late 80s or 90s.

Delaying is also especially valuable for the higher earner in a married couple. When one spouse dies, the survivor keeps the larger of the two benefits, so a bigger check can protect the surviving spouse for decades.

What Is the Behavioral Choice for Social Security?

The behavioral choice is the claiming age that fits your real cash flow and your comfort with risk. If delaying Social Security means you would need to draw heavily on savings earlier in retirement, or if you lack the income to cover your spending in the meantime, it still might not be the right choice for you.

A few tradeoffs to weigh:

• Portfolio withdrawals: Delaying means spending more from your savings in the early years, which can be uncomfortable during a market downturn.
• Health and family history: Poor health or a shorter life expectancy can favor claiming earlier.
• Peace of mind: A guaranteed paycheck sometimes helps people spend confidently and enjoy retirement.
• Taxes: Using savings in the early years can open up planning opportunities, which leads to the next topic.

The best claiming age is the one you can stick with. A plan that looks perfect on paper but causes stress or forces you to sell investments at a bad time is not a good plan.

What Is the Income Valley, and Why Does It Matter in Retirement?

The income valley is the period of lower taxable income between the day you retire and the day you start collecting Social Security and taking required minimum distributions (RMDs). It matters because it is often your best window to pay taxes on your retirement savings at a lower rate.

Why Does Income Drop After Retiring?

When you have realistic expectations for retirement, you may find yourself with much lower income than you had while working. Your paycheck stops, and if you delay Social Security, that income has not started yet. If most of your spending comes from savings or cash, your taxable income can fall well below your working years.

This income valley can last anywhere from a few years to more than a decade. It typically ends when Social Security begins and when RMDs start from tax-deferred accounts such as traditional IRAs and 401(k)s. For people born in 1960 or later, RMDs begin at age 75.

How Can Roth Conversions Help During the Income Valley?

Proactively doing Roth conversions during the income valley can help you pay lower taxes on those dollars and reduce your lifetime taxes. A Roth conversion moves money from a traditional IRA or 401(k) into a Roth IRA. You pay income tax on the amount you convert in the year you convert it, and after that the money grows tax-free and has no RMDs.

The logic is simple. If your income is low in your early retirement years, you can fill up the lower tax brackets with conversions now, instead of letting those dollars grow and later be taxed at higher rates once Social Security and RMDs stack on top of each other. Converting also reduces the size of your traditional accounts, which can lower future RMDs and leave a more tax-efficient inheritance for your heirs.

Conversions come with tradeoffs, and the details matter:

• Tax brackets: A conversion adds to your taxable income, so the goal is to convert up to a specific bracket, not as much as possible.
• Health insurance: Higher reported income can reduce marketplace premium tax credits before 65 and trigger IRMAA surcharges on Medicare premiums after 65.
• Paying the tax: It is generally best to pay the conversion tax from non-retirement money, so the full amount keeps working for you.
• Social Security timing: Delaying Social Security can lengthen the income valley, which creates more years to convert.

This is why the three considerations connect. Your healthcare coverage, your Social Security claiming age, and your income valley are not separate decisions. Each one affects the others, and a coordinated plan can outperform decisions made in isolation.

What Is the Best Retirement Advice for 60-Year-Olds to Act On Now?

The best retirement advice for 60-year-olds is to make a plan for these three things before you retire: pick your health insurance for the years before Medicare, choose a Social Security claiming strategy you can live with, and use the income valley to reduce your lifetime taxes.

You do not have to solve everything at once, but you should start early. Each of these decisions gets harder to optimize once you have already stopped working. A fee-only fiduciary financial planner can model the tradeoffs with your actual numbers and help you see how the pieces fit together.

If you are approaching retirement and want a clear plan, Oak Road Wealth Management can help. We are a fee-only fiduciary firm based in Lee's Summit, Missouri, and we work with clients across the country.

Frequently Asked Questions

Can I retire at 60 before Medicare starts?

Yes, but you will need your own health insurance until you turn 65. Your options are typically your spouse's employer plan, a marketplace plan, or COBRA. Build the full cost of coverage into your retirement budget before choosing a retirement date.

What is the best age to claim Social Security?

The best age depends on your health, your other income, and your goals. Delaying until 70 generally produces the highest lifetime benefit for people who live a long time, while claiming earlier can make sense if you need the income or have a shorter life expectancy. The right answer balances the math with your cash flow.

How much money do I need to retire at 60?

There is no single number. The right amount depends on how much you spend, when Social Security starts, your health insurance costs, and how your savings are taxed. A retirement income plan that connects your spending to your savings and income sources gives a more reliable answer than a rule of thumb.

What is the income valley in retirement?

The income valley is the stretch of lower-income years after you retire and before Social Security and required minimum distributions begin. Because your taxable income is lower in these years, it is often a good time to consider Roth conversions.

Is a Roth conversion a good idea at 60?

It can be, especially if you expect lower income in the coming years than you will have later. Converting during the income valley lets you pay tax at lower rates now and can reduce future RMDs. Whether it makes sense for you depends on your tax bracket, your health insurance costs, and how you will pay the tax.

What are RMDs, and when do they start?

Required minimum distributions are the minimum amounts you must withdraw each year from tax-deferred retirement accounts like traditional IRAs and 401(k)s. For people born in 1960 or later, they begin at age 75. Withdrawals are taxed as ordinary income.

Why work with a fee-only fiduciary financial planner?

A fee-only fiduciary is legally required to act in your best interest and is paid by you, not by commissions on products. That structure removes a major conflict of interest, which matters when you are making decisions about retirement income, taxes, and healthcare.

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This article is for educational purposes only and is not personalized financial, tax, legal, or investment advice. Rules for Social Security, Medicare, and retirement accounts change, so consult a qualified professional about your specific situation.

Written by Andrew Matz, Financial Planner at Oak Road Wealth Management.