As individuals approach and enter their 60s, the traditional paradigm of aggressive retirement savings often shifts, particularly for those whose financial plans are already well-established. While the conventional wisdom emphasizes maximizing contributions, including catch-up provisions, financial experts are increasingly advocating for a nuanced approach that prioritizes psychological returns alongside financial ones. Christine Benz, Director of Personal Finance and Retirement Planning for Morningstar, highlighted this evolving perspective in an Associated Press report on May 5, 2026, suggesting four key financial moves that might offer the best ‘return’ on investment for this demographic.
Benz notes that for those over 60, additional contributions to retirement accounts, while beneficial, have fewer years to compound, and the tax deferral benefits may not be as valuable as they once were. Instead, if one’s retirement numbers are in relatively good shape, a strategic allocation toward decisions that deliver a positive psychological payoff can significantly enhance the quality of life in the pre-retirement and early retirement years.
Funding Big-Ticket Outlays from Working Income
One primary strategy involves proactively funding significant expenses from current working income, rather than deferring them until retirement. Benz advises forecasting major outlays expected over the next two to five years, such as substantial home repairs or improvements, or the replacement of vehicles. By addressing these costs while still employed, individuals can avoid the psychological stress often associated with drawing funds directly from investment accounts, especially in the nascent stages of retirement.
This approach is particularly beneficial for those planning to delay Social Security benefits, as they will rely entirely on their portfolios for cash flow during those initial retirement years. Spending from working income is generally perceived as more psychologically palatable. Benz encourages individuals to align these expenditures with their vision for retirement; for instance, investing in new kitchen counters if cooking is a passion, or securing a safe, reliable vehicle for anticipated road trips.
Prepaying a Mortgage for Peace of Mind
The decision to prepay a mortgage often involves a careful calculation between debt reduction and alternative investment returns. While many mortgage holders today might reasonably earn more on safe investments than they pay in debt service, Benz emphasizes the significant psychological benefit of eliminating mortgage debt. She cautions against liquidating retirement accounts, which could trigger substantial tax bills or leave individuals cash-strapped, but highlights that a mortgage paydown is the ultimate ‘sleep at night’ allocation.
This move helps to significantly reduce fixed expenses, fostering a more flexible approach to discretionary spending in retirement, which can, in turn, boost lifetime retirement spending. Christine Benz unequivocally states, ‘I’ve yet to meet a single person who paid off a mortgage and regretted it,’ underscoring the profound sense of security and freedom it provides.
Building a Taxable Account for Flexibility
Another strategic move involves establishing or expanding a taxable investment account. Unlike tax-advantaged retirement accounts, taxable accounts offer unparalleled flexibility, allowing individuals to contribute and withdraw funds without strictures. This liquidity and minimal tax implications on withdrawals provide leeway for pursuing other valuable financial strategies in early retirement, such as converting traditional IRA assets to Roth accounts.
However, Benz offers a crucial caveat: avoid over-allocating to safer assets within taxable accounts. Cash, for example, typically offers a low return relative to other assets and may not even keep pace with inflation. Her recommendation for retirees is to hold ‘no more than two years’ worth of liquid reserves—CDs, money market mutual funds, and so on—across both taxable and tax-sheltered accounts,’ balancing liquidity with growth potential.
Investing in Experiences While Healthy and Working
The final strategy encourages individuals in their 60s to embrace ‘big, fun experiences’ while they are still working and in good health. Recognizing that life can be unpredictable, Benz suggests leaning into travel or even purchasing a vacation home now, rather than indefinitely postponing these aspirations for a future that may not fully materialize. This approach acknowledges the reality that many loved ones are ‘struck down in the prime of their lives, before they really had a chance to enjoy their retirements to the fullest.’
As Jamie Hopkins notes in Christine Benz’s book, How to Retire, continuing to work and earn an income while enjoying these splurges serves a greater good by forestalling portfolio withdrawals. This balance of work and immediate gratification can make continuing to work more palatable and foster a greater sense of comfort with these significant expenditures, even if it means slightly adjusting savings rates.
These four strategies, as articulated by Christine Benz, represent a shift in retirement planning for those over 60, moving beyond a sole focus on financial accumulation to a more holistic view that integrates psychological well-being and immediate gratification. By strategically allocating resources to pre-fund major expenses, eliminate debt, build flexible taxable accounts, and enjoy life’s experiences while healthy, individuals can cultivate a more secure, flexible, and fulfilling retirement journey.
