You’re getting close to retirement and wondering how you’re going to handle your money. You’ve got questions about topics such as using retirement to pay off debt, when to start Social Security withdrawals and the like.
Here are some money management tips for retirees to help guide you.
You likely have been putting away as much cash as possible for your retirement and maximizing investment returns. It’s widely recommended, though, that you prioritize turning retirement assets into steady retirement income before the big day arrives.
An equity indexed annuity with a lifetime income benefit rider is one strategy for doing so. Another is investing money in small businesses that can provide ongoing income.
Be Strategic with Withdrawals
Each of your retirement accounts may be taxed differently, so you might want to enlist the help of a financial advisor well-versed in retirement drawdown strategies.
On the DIY front, the NewRetirement Planner platform can estimate your Required Minimum Distributions and help you put together Roth conversion and tax-efficient withdrawal plans. Overall, it’s important to know the amount you’ll withdraw annually and how that affects your tax bracket.
Put Yourself First
Retirees generally have fewer opportunities to make money. For the most part, you must live with what you have. However, you may have family members – siblings, adult children, or parents – that you might want to help but may not realistically be able to. When you’re retired, each expense must be accounted for. Learn to say “no.”
Prioritize Your “List”
By the time you’ve reached retirement age, chances are you know what you like and what you want. Zeroing in on what’s most important, might position you to spend less overall. It’s all about prioritizing goals and cutting back in other areas.
Assess How You Can Use Your Home Equity
You can use the equity you’ve built up in your home to help pay for retirement. You might want to consider downsizing to one more suitable for your retirement needs or relocating to a less-expensive area.
You may also wonder, should I use my retirement to pay off debt? That’s another question for your financial adviser. If you do decide to eliminate debt, the equity you have in your home could help.
Don’t Start Social Security Too Soon
If you can hold off on Social Security until you’re 67 or older, rather than taking it at 62, you’ll potentially net hundreds of thousands of dollars. Thus, you will likely be able to have a higher standard of living in retirement. Talk to a financial advisor about the best time for you to begin drawing Social Security.
Don’t Forget Out-of-Pocket Health Expenses
According to Fidelity Investments, a 65-year-old couple that retired last year can expect to dole out $315,000 in medical and health expenses over the remainder of their lifetimes.
Such expenses can include insurance co-payments and deductibles, prescription medications, supplemental coverage premiums and such. That doesn’t include the $100,000 or so that might be needed for long-term care.
Manage your diet carefully and exercise in order to remain as healthy as possible through retirement. It’s also a good idea to explore supplemental Medicare coverage.
Talk to Your Spouse
A Fidelity study found 47% of couples differ on how much they must save to preserve their desired lifestyles. It is important to get on the same page when it comes to retirement spending, so continue to have discussions with your spouse about needed savings.
Continue to Plan After Retirement
Things change. Therefore, you must continue to evaluate your circumstances even after you’ve retired. Perhaps you need to adjust you investments or decide to return to work. Review your situation monthly to stay atop your financial wellness.
You’ll stand a better chance of truly enjoying your Golden Years if you employ these money management tips for retirees. Don’t be shy about seeking professional help either—and sooner rather than later.