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6 Financial Planning Tips for Retirees


The key to maximizing your retirement will depend on your ability to select financial planning resources that align with your specific goals and finances. Here are six general tips that can help you meet needs at every stage of your retirement planning. For help creating a long-term financial plan, consider working with a financial advisor.

1. Create an Expense Plan

Expense planning involves outlining anticipated expenditures, allocations and financial commitments over a specified period. You can apply this structured strategy to your retirement planning with the goal of attaining financial security. This is typically done through budgeting applications or spreadsheets, which can help you effectively manage expenses to free up funds for emergency savings, investment opportunities and other financial needs or goals.

Finally, you may also consider using a budgeting rule, like the 50/30/20 rule, which can provide a simple and effective framework to allocate enough money for essential expenses, discretionary spending and savings or debt repayment.

2. Diversify Your Portfolio

Once you retire, you will still need to find ways to preserve your savings and make sure that you continue growing it as much as you can while you are spending some of it.

One common way to safeguard your retirement nest egg is to diversify your investment portfolio. You can do this by spreading investments across various asset classes, including stocks, bonds and real estate in order to reduce the risks tied to any one investment.

3. Add Another Income Source

Adding a source of revenue beyond traditional employment could help preserve and boost your retirement savings. This can involve various strategies such as starting a side business, investing in rental properties, freelancing, or generating passive income through investments like stocks, bonds, or real estate.

Diversifying your income could help mitigate the risks associated with relying on one source of income. Additionally, it can help stretch out your nest egg and make your retirement sustainable over a lifetime.

Moreover, you may consider adding insurance products like annuities or long-term care insurance to provide a safety net against unexpected expenses or market downturns that could threaten your retirement nest egg.

4. Create a Withdrawal Strategy

Clients writing down financial planning tips offered by an advisor for retirement.

You will need to develop a withdrawal strategy so that you can tap into your retirement accounts while avoiding potential penalties and minimizing taxes. This can involve timing withdrawal amounts from retirement accounts to ensure financial stability throughout retirement.

If you are saving for retirement through employer-sponsored plans such as 401(k)s or 403(b)s, and other similar tax-deferred retirement accounts, you will have to take required minimum distributions (RMDs) starting at age 73. And this in turn can increase your taxable income, which could potentially push you into a higher tax bracket with a higher tax rate.

Additionally, you could face a 10% early withdrawal penalty for retirement accounts like traditional IRAs and 401(k)s if funds are taken out before age 59½. You could, however, qualify for an exception if you meet specific circumstances like disability or withdraw the money to pay for certain expenses. So, if you plan to retire early, you may want to prioritize taking money from other sources of income and savings before withdrawing from these retirement accounts until you are over the age limit.

Finally, you may consider using a withdrawal rule like the 4% rule, which is a guideline that suggests withdrawing 4% of your retirement portfolio in the first year of retirement, and then adjusting subsequent withdrawals annually for inflation to stretch out your nest egg over a 30-year retirement period. Though you will still need to plan for unforeseen market fluctuations or unexpected increases in expenses that could deplete your retirement portfolio faster.

5. Review and Rebalance Regularly

Reviewing and rebalancing your portfolio regularly can help you keep it aligned with your risk tolerance and long-term financial goals.

By assessing your portfolio periodically, you can adjust asset allocations to maintain a desired level of risk and optimize returns. This involves selling assets that have become overweighted and reinvesting in underweighted areas to maintain diversification and manage risk.

Reviewing your portfolio will also allow you to assess the performance of individual investments, identify underperforming assets, and make informed decisions about whether to retain, sell, or reallocate them.

6. Consider Additional Types of Healthcare

You want to consider getting additional coverage beyond traditional health insurance in retirement. This can help minimize gaps in coverage and cover services that are typically not insured by Medicare or employer-provided plans.

One common strategy is to get an umbrella insurance for Medicare, also known as Medigap or Medicare Supplement insurance, which provides additional coverage for out-of-pocket expenses, such as copayments, deductibles and coinsurance for retirees.

Another strategy can be to get long-term care insurance, which provides financial protection and assistance with daily activities in the event of a chronic illness, disability, or cognitive impairment.

Bottom Line

Clients reviewing financial planning tips from an advisor for retirement.

Retirement is a major financial milestone, but planning for it will last your entire life. Therefore, creating a retirement plan early on could help position you strategically to effectively manage your finances. Though this does not mean that you can set it and forget it. You will still need to track your expenses, diversify your portfolio, consider other income sources, create a withdrawal strategy, review and rebalance, and look into additional healthcare coverage, among other tips, to help ensure a comfortable retirement.

Tips for Retirement Planning

  • Whether you need help preparing for retirement or figuring out your finances during retirement, a financial advisor can guide you in creating a plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If you’re not sure how much you still need to save for retirement, consider using a free retirement calculator.

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