Retirement brings freedom from many responsibilities, but it also comes with a set of responsibilities of its own, like the five outlined below:
- Learn to budget. It’s simple: Just figure out how much income you’ll obtain from Social Security, pensions, and other retirement savings, and estimate as closely as possible how much money you’ll spend. Ensure that the numbers are equal and revisit the budget frequently.
- Allocate your assets. You likely shifted your investment portfolio to focus on maximizing income as you approached retirement; once you retire this should become the number one goal of your portfolio. It’s not uncommon for your risk tolerance to diminish as you move into retirement.
- Don’t forget estate planning. Estate planning isn’t just for the wealthy; it simply refers to getting your estate in order so that transition, whenever it should happen, is easy. Ideally, you’ll have a will, a power of attorney, and a health care proxy. And you’ll keep current the beneficiaries listed on your financial accounts and insurance policies. Be sure to discuss your estate plans with your family so they understand your wishes and their responsibilities.
- Get advice. While people are in the workforce, earning and saving, they may not seek preretirement advice. But when you’re a retiree on a limited budget, this becomes essential. An experienced accountant, for example, can produce significant tax savings, and a financial advisor can help you time financial withdrawals from different accounts to minimize capital gains. Plus, you’ll need an attorney to draw up wills and powers of attorney.
- Develop a nonfinancial plan. With all the talk about financial planning, it’s easy to forget that a happy retirement is about much more. It’s important, both mentally and physically, for retirees to stay active and engaged. Plan ahead how you want to spend your time during your retirement.