Retirement Retirement Planning

Everything Changes Financially After 60 - Here's How to Prepare

Smart money moves will help you prepare for a changing income and expenses.

Edited by Amanda Machado

Updated Jan. 13, 2026

Your 60s are a time of change where you'll likely stop working a full-time job and have more time to spend on the things you enjoy. However, this season of life also requires learning to get by with a new income structure and budgeting for changing expenses.

The more you plan ahead during your remaining working years, the less stressful this transition will be on your finances. Whether your 60s are quickly approaching or still a decade away, you should learn what to expect and make the right moves for financial security.

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Your income structure will look different

While you might work in your early 60s, you'll eventually face a new income structure when you retire. Instead of having a salary with potential bonuses or overtime, you'll shift to a more fixed income with monthly Social Security payments (averaging $2,071 for retired workers in Jan. 2026), retirement plan withdrawals, and other potential sources, such as pensions.

Since there's less flexibility for covering your monthly bills and unexpected expenses, you'll need to be strategic. This includes deciding how much to withdraw from your retirement savings annually without outliving them, when to claim Social Security, and how to adjust your lifestyle to your new financial situation.

Additionally, you'll need to consider the timing of your retirement income sources and potential taxes, which will reduce your funds for expenses.

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Your expenses will shift

Your 60s will involve changes in your spending patterns as your lifestyle and health needs change. While you might save in some areas, rising costs in others can offset those savings.

Once you stop working, you'll probably spend less on things like commuting, work clothes, educational expenses, and work lunches. Your senior years might also mean no need for a second car and cheaper housing expenses if you've paid off your mortgage.

However, 60-somethings are often surprised by higher health care costs, which can exceed six figures over retirement. Having more free time can also lead to increased spending on travel, restaurants, hobbies, and even home renovation projects. Careful budgeting will be key.

How can you prepare for these changes?

While these changes are inevitable, you can take steps now to improve your financial situation, maximize your retirement savings, and address expenses that could strain your future fixed income. Here are seven moves to make before you turn 60.

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Check on your retirement savings

Your retirement savings needs depend on several factors, including your expected income sources, expenses, life expectancy, and desired lifestyle. However, T. Rowe Price suggests having 6 to 11 times your salary by age 60.

If you're falling short of this guideline or your personal goal, consider boosting your retirement contributions while you're working. After age 50, you benefit from increased annual contribution limits for your 401(k), IRA, or other tax-advantaged account.

Think about when you'll claim Social Security

Claiming Social Security at 62 results in a permanent reduction of up to 35% of your full amount compared to waiting until the full retirement age of 66 to 67. Delaying benefits after full retirement age increases your benefit by 8% every 12 months up to age 70.

Timing is also important for maximizing your benefits due to potential earnings reductions. If you're claiming Social Security before full retirement age and still working, you'll typically see a reduction of $1 in your benefits for every $2 above the annual limit ($24,480 in 2026).

Revisit your budget

Review your current budget to see where you stand and whether you can already cut expenses to maximize your working income. Also, simulate your future retirement budget with your expected income, including Social Security and retirement plan withdrawals, and your updated expenses.

If the numbers indicate a shortfall, reconsider your future retirement plan. This could mean working longer, claiming Social Security later, or boosting your savings.

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Tackle debt

Managing debt becomes more difficult once you're on a fixed income. Paying off your mortgage, credit cards, and other loans while you're still working will leave more room in your budget. Plus, you'll probably save a lot of money on interest.

Consider the popular debt snowball and debt avalanche methods, which involve strategically paying down debt by making larger payments on one targeted balance at a time.

Boost your emergency fund

While useful at any age, having a high-yield savings account with three to six months' worth of expenses will especially provide peace of mind as your finances change. You can use these funds for a big medical bill, a home repair, an unexpected job loss, or another financial hardship. These emergency savings will also help avoid further debt in your 60s.

Revisit your investment strategy

As you approach retirement age, revisit your investment strategy to reduce risk and preserve your savings. For example, you might increase your cash and bonds allocation and reduce your stock allocation.

But run the numbers to see how these changes affect your ability to reach your savings goal. Also, consider consulting a financial advisor before making adjustments.

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Plan for future health care needs

You can sign up for Medicare when you turn 65. Until then, you should have traditional health insurance that fits your budget and covers what you need. Long-term care insurance is also worth considering, as many seniors will need such care at some point.

Also, contribute to a health savings account if you're eligible. Not only can you make tax-free contributions, but you'll also enjoy tax-free withdrawals for qualified medical expenses. Once you're 65, you can even make taxable withdrawals for other purposes.

Bottom line

Rather than let your 60s cause a financial shock, take the opportunity to make smart decisions that start to pay off today and help set you up for a stress-free retirement. After all, you don't need to wait until your golden years to use a health savings account or become debt-free.

And since Social Security is important for supplementing your retirement savings, check your Social Security statement online to get an idea of what your future benefit amount might look like at different ages.

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