5 Genius Moves to Make With Your Retirement Accounts After 62 (And 5 To Avoid)

The choices you make in your 60s affect whether you truly feel secure in retirement, as many of your financial moves will determine how long your money lasts.

As you get closer to required minimum distributions (RMDs) and Medicare, each move with your retirement accounts has a bigger impact on your future flexibility. A few smart strategies now could lower your lifetime tax bill and give you more predictable income later on.

Here are a few dos and don'ts to help you make the most of the remaining years of your retirement planning.

Genius moves to make after 62

Ages 62 to 73 are a powerful planning window where you can control withdrawals, taxes, and the timing of your Social Security. Think of this time in terms of a lifetime tax bill and retirement income stability, not just what it takes to reduce taxes for this coming year.

The following strategies can help.

1. Take advantage of the $6,000 senior bonus deduction

The senior bonus deduction is a temporary extra deduction available between 2025 and 2028 for taxpayers age 65 and older, with the full $6,000 deduction phasing out above certain income levels. It can lower taxable income by up to $6,000.

It's a chance to pull more from traditional IRAs or do Roth conversions while staying in a reasonable tax bracket. Pair withdrawals or conversions with this deduction to move money from 'tax later' accounts into Roth or cash with less tax pain.

2. Use the 62-73 gap years for Roth conversions

Gap years are the time between the age of 62 and when Required Minimum Distributions (RMDs) begin at 73. Most people have a lower income in this window if they retire or cut back on working hours.

Lower earned income often means lower tax brackets and the chance to do partial Roth conversions. You'll be able to "fill up" your current tax bracket without going into the next one and reduce future RMDs and taxable income in your late 70s and 80s. It's also a move that could minimize Medicare-related surcharges or taxes on Social Security benefits.

3. Keep one to two years of expenses in cash

Big market drops early in retirement may hurt more if you're forced to sell your investments to pay bills. That's why having a cushion for 12-24 months of essential expenses lets you ride out downturns with more peace.

This cash buffer can sit in high-yield savings, money market funds, or short-term CDs. In any case, market dips won't cause panic, even if you typically rely on riskier investments to keep your bills paid.

4. Delay Social Security while tapping tax-deferred accounts

If you claim Social Security at 62, your benefits will be permanently reduced. But delaying it until 70 boosts your benefit by about 24% compared with waiting until full retirement age.

Start by spending down traditional IRA or 401(k) money first in your 60s, within reason, and let Social Security grow in the background. You could get a higher guaranteed income later through bigger Social Security checks and offer smaller tax-deferred balances.

The strategy is especially useful for those worried about outliving their savings, since you may also get lower RMDs and potentially less tax on future benefits.

5. Max out the "super catch-up" if working late

People aged 60 to 63 have a special window to make an extra $11,250 contribution on top of the base $24,500 contribution to the workforce plan. If you're still working, this may be the best chance you have to put away for your nest egg.

For those behind on savings or who plan to retire soon, contributions go straight into near-term retirement. Even one or two years of maxing it out adds a meaningful boost. Just be sure to coordinate it with your overall cash flow and debt.

Costly mistakes to avoid after 62

The same years that offer great planning opportunities are also years filled with big decisions. If you feel rushed or emotional, you may not come up with the right plan for your long-term comfort and security.

The following mistakes may not be reversible and could shrink lifetime income, trigger taxes, or send your hard-earned money to the wrong people.

1. Cash out 401(k)s or IRAs all at once

When you take a large lump sum or empty an account instead of planning withdrawals or rollovers, you can take a big tax hit. It's counted as ordinary income and can push you into the next tax bracket and trigger big IRS bills.

Weigh taxes, fees, and opportunity costs against any short-term benefits you get from draining the accounts. Consider IRA rollovers, staged withdrawals, or staying in the plan (if you can afford it).

2. Go too conservative with your investments

Shifting some money toward safer assets as you age makes sense. But going all cash or all bonds could cause your portfolio to lag behind inflation over the course of your retirement.

Since inflation erodes purchasing power, you need at least some growth-oriented assets to keep up. A balanced mix can still reduce volatility while offering some growth — an important strategy for those who may meet rising life expectancies.

3. Claim Social Security at 62

While it may make sense in some instances, you'll take a 30% pay cut compared to those who wait until full retirement age (FRA) for their Social Security benefits. It's a permanent reduction, too, that ensures every check for the rest of your life is lower than it could be.

Run the numbers or talk to a planner to see whether less money in the long term or more money up front makes sense for your unique life plan, health, and financial risk tolerance.

4. Ignore IRMAA when doing Roth conversions

You could get hit with an IRMAA (Income-Related Monthly Adjustment Amount) surcharge on Medicare Part B and Part D premiums. Large IRA withdrawals or Roth conversions may trigger an IRMAA (Income-Related Monthly Adjustment Amount) surcharge when they push your Modified Adjusted Gross Income (MAGI) above Medicare thresholds.

It happens to retirees with high income, based on tax data from two years prior. The IRMAA risk doesn't mean you can't convert, but you should plan to do so carefully with smaller, staged conversions that stay under key income brackets.

5. Ignore beneficiary designations

Even if you have something else stated in your will, beneficiary forms for your IRAs and 401(k)s often have the final say for each account. If you haven't updated them since a divorce, remarriage, family death, or birth, you may not see your money go where you want it to.

Review this every few years to ensure your designations are correct and to prevent legal headaches for your loved ones after you're gone.

Bottom line

After 62, retirement accounts are savings, but they're also tools for tax planning, income stability, and your legacy. Combining some genius moves for a powerful plan ensures your nest egg is as healthy as it needs to be.

The key is to look beyond this year's tax bill and focus on what will give you the most flexibility and peace during your retirement.

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