Retirement is an exciting time. After decades of working, many seniors look forward to taking life at a slower pace. Maybe to you, retirement means finally having time to travel the world. Or explore a hobby you’ve always enjoyed. Or perhaps you see it as an opportunity to spend more time with family and friends.
No matter how you plan to spend your retirement, it’s important to consider your financial health. Even though you’ve spent the majority of your life saving, like most seniors, by the time you actually reached retirement, you likely found yourself questioning whether what you’ve save will be enough to cover everything you’ll need in the future.
Retirement Planning Tips for a Secure Financial Future
Don’t let your retirement get bogged down by financial stress. Here are some quick financial tips for retirement to ensure a sound future money-wise.
- Consult a trusted tax & financial advisor. Sorting through all the tax implications and rules of retirement can be complicated. A trusted tax consultant can help you understand the fine print of retirement—helping you identify ways to maximize any tax benefits, while also ensuring you don’t get penalized for things like failing to take the required minimum distributions from an IRA or other investment accounts. Additionally, a financial advisor who specializes in helping retirees can help you organize your finances and come up with a plan to help you maximize your retirement savings and investments. They can also help you diversify your portfolio so your accounts continue to make money well into your retirement.
- Look for ways to minimize and eliminate debt as soon as possible. No matter what stage of life you’re in, it’s important to keep your debt to income ratio low. This is especially important for new retirees. Find ways to minimize and eliminate “bad” debt such as credit card debt, equity lines of credit and car loans. Maintaining “good” debt, from things that appreciate in value, such as a mortgage is okay, as long as your mortgage payment does not exceed 28 percent of your gross monthly income.
- Find areas to downsize and reduce recurring costs. Retirement is often associated with downsizing—and with good reason! Many seniors no longer want to be bothered by the maintenance of a large home or are looking to reduce or eliminate mortgage payments. Retirement is also a good time to evaluate other recurring costs from things like monthly subscriptions, memberships or services you no longer need or want.
- Consolidate banking accounts and investment funds. It’s not uncommon to retire with banking accounts across multiple banks and investments across multiple funds. Start by consolidating all checking and savings accounts to one bank. If you have more than one savings account, consider consolidating those as well to reduce banking fees, while maximizing interest benefits. Additionally, move all investment accounts to one financial institution. This can again help reduce brokerage fees while allowing you to re-evaluate your portfolio for maximum results.
- Factor inflation into your budget. Many retirees start retirement by setting a monthly budget. But many fail to factor inflation into that budget and over time, realize that the initial budget they set doesn’t go as far as it used to. While inflation varies year over year, many financial advisors recommended assuming a 3 percent increase.
- Regularly evaluate your financial health. Financial planning is often top of mind for new retirees, but it’s important to regularly assess your financial health. Taking time even just once a year to re-evaluate your retirement plan can help you avoid financial issues down the line.
Plan for the Future at Western Home Communities
As you enter retirement, it’s important to consider the role a senior living community plays in your long-term plans. At Western Home Communities, we offer a variety of living options for seniors, all designed to help retirees stay active, healthy and social as they age. If you’re considering downsizing to a community design specifically with the needs and wants of seniors in mind, contact Western Home Communities to learn more.