Financial Dos and Don’ts for Seniors

You’ve been looking forward to retirement for years. You’ve got plans to travel, to spend more time with your family, or to really get into the hobbies you never had enough time for. You’ve saved diligently, or maybe you didn’t save quite as much as you hoped. Whatever scenarios apply to you, it’s important to make the right financial moves after retirement. The tips below can help you manage your money better.

Do Create a Budget

You need to make sure that you have enough money to provide for your needs, possibly for decades. It’s best to be conservative with this estimate although in addition to continuing to work, there are ways to generate more money after you retire as discussed elsewhere in this article. However, to start with, work with the amount of money that you have and figure out how much you can afford to spend each year over several decades. Taking a look at the larger picture will help guide you towards efforts like reducing your car payment, deciding if you need to downsize your home, and planning for activities like travel and hobbies.

Don’t Overextend Yourself with Family

You may find yourself in a situation in which your adult children or even your grandchildren could use some financial help, and you probably want to help them. This is a good instinct, and there’s nothing wrong with helping where you can, but be very certain that you can afford to do so. You may need to set boundaries with family and put yourself first even though it may be difficult.

Do Review Your Insurance

You need to be adequately insured. For example, do you need long-term care insurance? Do you need additional health insurance coverage? You should also take a look at your life insurance. If you are like many people, you may have purchased it when your children were young, and you wanted them to be provided for if anything happened to you. You may not need it any longer, but if you have a term life insurance policy, you might also assume that it has no value. In fact, selling a term life insurance policy is possible in some cases. You could do this in a transaction that involves selling to a third party, who would then take over the premiums. While you would not get the full amount of the death benefit, you would get more than the cash value. This can be a substantial addition to your retirement fund.

Don’t Neglect Your Estate Plan

If you don’t have an estate plan, you should make one, and if you do have one, you should review it and see if you need to make any changes. Don’t forget to look over your beneficiary designations as part of this. In addition, make sure that you have provisions in place in case you become incapacitated. It’s a good idea to have a power of attorney or make some other legal arrangements that will allow someone to take over your finances in this situation. As for your estate plan in general, this is a good time to start thinking about tax or other strategies and your legacy in terms of what you want to happen to your assets. You might want to leave something to a charity that is meaningful to you in addition to passing assets on to loved ones.

Do Consider Continuing to Invest

You can continue to generate income and wealth by investing after retirement to supplement your existing savings and your Social Security. You might still have an appetite for risk, but you should make sure to only put money that you can afford to lose into riskier investments. You have a number of options. Savings accounts and certificates of deposit are extremely safe although the problem is that when interest rates are low, the money you place in them might not keep up with inflation. Bonds are another safe choice that can produce income as can annuities although those can be more complex. You may want to continue investing in stock as well. If you can afford it, investing in real estate is another way to generate income. If you can’t or don’t want to buy an entire property or become a landlord, you could consider a real estate investment trust, which allows you to purchase shares of a property much as you would with stocks.