The process of planning for retirement can be difficult at any age. Even so, there are some steps you can take when you're in your mid-60s or older to ensure that you're prepared for your golden years. Here are some suggestions.

Once upon a time, the average age at which people retired was 65, but times have changed. Every government agency, including the Social Security Administration (SSA), has raised the age at which full retirement benefits become available. In addition, there has been a shift away from defined-benefit plans and toward defined-contribution plans in many company-sponsored retirement plans.

Adding to these shifts is the fact that many savings programs are not generating the returns that were anticipated. It's understandable why many people may need to put their retirement plans on hold.

Of course, even if you are in good financial shape, reaching the age of 65 does not always imply that it is time to stop working. Many people over the age of 65 enjoy their jobs and would like to continue working in them. Nonetheless, there are a few things to consider—and take care of—as part of your retirement planning when you are in your mid-60s or older.

Determine Your Level of Preparedness for Retirement

For example, if your company's policy is to allow you to retire at the age of 65, consider whether you are truly prepared to leave from both a psychological and a financial standpoint. If this is the case, you should consider whether you want to ask your employer to extend your employment for a few more years, or whether you want to be hired as a consultant.

Ideally, you will complete this process at least a year before you reach the age of 65, because some employers begin the retirement process earlier than this. Many employers are now putting more emphasis on hiring and retaining employees who are experienced and "know the business" in order to strengthen their intellectual capital banks.

Staying on as a salaried employee not only ensures that you continue to receive a consistent income, but it also ensures that you continue to receive health insurance and any other benefits that your employer provides you with. As an alternative, choosing the consultant route provides you with greater flexibility and the potential to enjoy more of a working retirement after your career is complete.

Make a plan for your retirement.

Retirees who have been saving for a long time may believe that reaching retirement age signals the beginning of their time to enjoy the fruits of their labor. It's understandable, but there's a danger that people will go overboard and spend everything in a few years.

Make a budget for your expenses to avoid falling into this trap. Make sure to account for any additional expenses you anticipate incurring, such as additional travel. Using this information, you can make a more realistic assessment of your financial ability to fund some of your future plans.
A budget becomes even more important after you have retired, because your income will most likely come from your savings, Social Security, and any pension plans that you may have accrued over the years.

The following is a budgeting tip from William DeShurko, chief investment officer at Fund Trader Pro: "Take out your most recent pay stubs and use them as a starting point." Take a look at your net pay after all of your deductions have been applied. Convert that to a yearly or monthly figure. Calculate any adjustments for amounts that will be different in retirement. Generally speaking, this number does not fluctuate much. If anything, it increases to account for the additional travel. If you have to budget every expense down to the penny, you shouldn't retire. If you have a 30- or 40-year period of spending ahead of you, you can't afford to be cutting corners."

Make a decision on when to claim Social Security benefits.

Social Security benefits are typically factored into a person's financial projections for their retirement. When incorporating Social Security into your financial planning, one of the most important decisions is determining whether you will receive full or reduced benefits.

At age 65, if you were born before 1938, you will be eligible to receive full retirement benefits from the Social Security Administration (SSA). You will receive your full retirement if you were born in 1938 or later; however, the exact date of your birth will determine how long after 1937 you were born.

Social Security benefits are reduced if you begin receiving them before reaching your normal retirement age. If you wait until you reach full retirement age, your benefits will be reduced even further.

If you do not require the payments when you reach full retirement age, you should consider delaying your retirement until you are 70 years old in order to receive the maximum benefit possible. Waiting any longer will not increase the amount of money you will receive.

Index Fund Advisors founder and president Mark Hebner, author of Index Funds: The 12-Step Recovery Program for Active Investors, explains that "factors that drive when it is best to take Social Security include your and your spouse's historical income, your ages, and your life expectancy."

"The vast majority of healthy adults would benefit from deferring their Social Security benefits until they reach the age of 70," Hebner continues. In order to help investors maximize their potential Social Security payout, there are online resources available to them.

Visit the Social Security Administration website to gain a thorough understanding of your Social Security benefits, including determining how much you are projected to receive in the future.

Enroll in Medicare if you are eligible.

Medicare can be used to cover certain medical-related expenses, rather than having to use your savings to cover those expenses out of pocket. As part of its hospital insurance coverage, Medicare also provides medical insurance coverage for physician services that are not covered by the hospital insurance. Hospital insurance coverage includes in-patient care and certain follow-up care.

Individuals over the age of 65 who qualify for Medicare are eligible to do so. (In the case of individuals who are disabled or who have permanent kidney failure, the age can be lower.) The medical portion of the insurance is available for a fee and is entirely optional for the policyholder.

If you are covered by a health plan through your employer, you may not require the medical portion of the plan. You can compare the costs and features of the two options and select the one that is most appropriate for your needs. Due to the fact that you already paid for it through your Social Security taxes while you were employed, you will not incur any additional costs as a result of the hospital insurance.

Make a living from your home.

The time may have come for you to consider whether you should downsize to a smaller home that is less expensive to maintain or relocate to a lower-cost of living area if you currently live in a large space. Changing residences may result in some additional funds that can be used to supplement your retirement savings.

Considering a reverse mortgage if you do not want to move or sell your home but require additional income but do not want to take on the risks associated with a traditional mortgage. A reverse mortgage is a type of loan in which a lender uses the equity in your home to provide you with income that is not subject to taxation.

Before applying for a reverse mortgage, be sure to ask as many questions as you can, including how much in fees you'll have to pay, the terms of the mortgage, and your options for receiving payment of your reverse mortgage.

Manage Your Retirement Income During Your Retired Life

If you need to take income from your savings to fund your retirement, take steps to ensure that you pay the least amount of taxes and receive the greatest amount of money back. Depending on your individual financial profile, you will be able to determine when it is most advantageous to use certain types of income.

The withdrawals from tax-deferred accounts such as traditional IRAs and employer-sponsored plans should be made during the years in which your marginal income tax rate is lower, in general. Your income tax liability on those amounts will be reduced as a result of this.

Make the bare minimum distributions required.

Of course, if you are over the required minimum distribution (RMD) age, you must take distributions from those accounts in order to meet your RMD obligations, regardless of your tax rate.

For many years, the RMD age was 712 years. The SECURE Act, which became law in December 2019, increased the age limit to account for rising life expectancies. To begin taking required minimum distributions (RMDs) from your traditional IRAs and 401(k) plans, you must wait until you are 72 years old. If you fail to withdraw the required minimum distribution (RMD), you will be subject to a 50 percent penalty on the amount you should have withdrawn.

Keep in mind that Roth IRAs are exempt from required minimum distributions.

You have the option of keeping your money in a Roth for as long as you want and then transferring the entire account to your heirs.

What's the bottom line?

You will almost certainly come across a lot of advice on how to time your retirement and how to manage your income. However, one thing to keep in mind is that there is no one-size-fits-all solution in this case.

By collaborating with a financial planner or a retirement counselor, you can develop a solution that is tailored to your specific needs and income. Idealistically, you should begin planning for your retirement as soon as possible. Also, remember to rebalance your investment portfolio as often as is necessary.