Friday, January 24, 2020

By the time you finally reach retirement, you’ll have already spent decades preparing, planning, and investing in your future retirement fund. But just because you hit your financial goals early doesn’t mean that you can slack off. Even in retirement, it’s crucial that you stay diligent and on top of your finances. Want to master your personal finances as a retiree? Read on.

Chart a Budget and Stick to It

You’ve probably been daydreaming about retirement for a while. But have you sat down and charted out what that looks like? Have you estimated a future budget? Everyone wants different things out of retirement. Some people are content to lead a frugal life in their waning years. Others want to travel the world, golf daily, and dine in luxury. Regardless, it’s critical that you crunch the numbers, calculate a figure, and then stick to it.

To help with this, use finance tools and resources to monitor your spending habits and ensure that you stay on track. Naturally, some expenses or costs may be higher than expected, especially when it comes to things like:

  • Healthcare
  • Home expenses and upkeep
  • Family member’s needs

If surprise costs crop up, you may need to adjust your budget.

Tap into Your Home Equity  

Ask yourself the following questions:

  • Do you own your home?
  • Are you 62 years or older?
  • Are you staying put for a while?

If you answered yes to all 3 questions, a reverse mortgage might be perfect for you. It would allow you to turn your property’s value into a monthly or lump sum cash flow. Does this pique your interest? Check out this free reverse mortgage calculator to get an estimate of how much money you might be able to get from a reverse mortgage. 

Don’t Forget About Your Taxes

The only things guaranteed in life are death and taxes. Well, you’ll likely be taxed up until (and even after) the day you die. You need to prepare and account for this fact. Also, remember that 

your various retirement accounts may be taxed differently. To that end, it’s crucial that you’re efficient when it comes to tax withdrawals. 

Taxes can be tricky, so why not get some help? If you don’t already, enlist the services of a financial advisor. A CFP can discern how much you withdraw annually and track how that figure moves you up or down the tax brackets. With their help, you can employ financial strategies like a Roth conversion in order to spread out your tax hits.

Wait on Social Security

Want to maximize your social security benefits? It may be wise to wait as long as possible before you start drawing on the account. Once you start using it, that’s a guaranteed monthly income that you can utilize for the rest of your life. But, the longer you wait, the more valuable it becomes! 

Each year that you delay accessing your Social Security provides you with an 8% benefits boost until you reach the age of 70. The difference between withdrawing Social Security at 62 and 68 could result in thousands, if not hundreds of thousands of extra dollars at your disposal. 

Generate Retirement Income

Your goal should be turning your retirement assets into a dependable retirement income. Creating revenue streams helps remove the stress involved with a dwindling retirement fund. At this age, it’s best to find passive income sources to supplement the money you’re earning in retirement. If cash is tight, consider renting out your home. 

In addition, diversify your income streams by investing in the following:

  • Fixed annuities
  • Municipal bonds
  • Certificates of deposit
  • Real estate
  • Stock market

Spend on Yourself

Unless you’ve made room in your budget for supporting family or friends, you need to focus on spending your limited retirement income on yourself. Significant unaccounted expenses are the surest way to mangle your financial situation. Your kids and family can work and make additional income. You don’t have that option. So, unless it’s an absolute emergency, keep your purse strings tight.


Mastering Your Finances

The beauty of retirement is that you’ve reached the point in your life where you are free to do whatever you want. That said, it’s critical that you’re careful with your spending and stick to your budget. Taking the proper precautions ensures that you’ll be able to live out the rest of your days in comfort.