A Practical Financial Strategy for Seniors to Better Manage Their Retirement

A Practical Financial Strategy for Seniors to Better Manage Their Retirement

October 08, 2021

Even if you spent your youth and middle age working and planning for retirement, you may feel lost when it comes to actually managing your finances throughout your golden years. While every nest egg is different, most seniors who have adequately planned for retirement can have enough for the necessities (plus a little more) if they are smart and practical about their money. Here are some tips courtesy of Beacon Wealth for better managing your retirement.


Simplify and consolidate


Here’s a simple fact: the more accounts you have - checking, savings, investment, retirement - spread out across multiple institutions, the more difficult it is to budget your retirement income and manage your spending every month. Clear up the confusion by consolidating your income into one checking and one savings account. Pay off all but one credit card and move all your investments into one brokerage.


Create a realistic budget

Retirement is simple when you think about it. All you have to do is not spend more than you have. Of course, simple doesn’t necessarily mean easy, and developing a proper, specific budget can help you have enough income for your various expenses.

In a way, budgeting as a senior can be easier because your expenses are more streamlined and there’s less of a focus on savings. Figure out what you need every month. Write down all your expenses, including any travel. Make sure you put an emphasis on healthcare spending and allow for excess in that department. Try a budgeting worksheet if you don’t know where to begin. Once everything is laid out, you may find that you don’t need as much to live comfortably as you think you do.


Know your options for withdrawing money from retirement accounts


Now that you know how much money you need to live, you need to figure out how you’re going to get that income. Obviously, most retirees will have money coming in from Social Security. Others may have a pension and/or a Roth IRA or 401(k) retirement account. But it’s not as simple as just taking your monthly allowance. There are strategies for withdrawal, including a conventional strategy that has you withdraw from non-retirement accounts (investments, taking annuities) and Social Security earlier, a reverse strategy that has you draw from retirement accounts first, and hybrid strategies. You should speak to a financial advisor at Beacon Wealth to see what sort of withdrawal strategy is right for you.


Never stop being frugal


Don’t waste money. Always be looking for ways to save on your daily and household expenses, even if you feel comfortable in your budgeting. Reduce the amount of recurring charges you have (extra streaming services, subscriptions, etc.), look for coupons, and shop smart.


If you’re planning on purchasing a new senior-friendly home, you can save here as well. If your credit is in good standing, you’ll likely qualify for lower interest rates, and if you’re a veteran, you may be able to purchase a home with more favorable interest rates and no money down through a VA loan. VA loans have the added benefit of not requiring the buyer to purchase private mortgage insurance.


One of the keys to an enjoyable, stress-free retirement is financial security. You don’t need a lot - just enough to be comfortable in your daily life and to give yourself the ability to have some fun. Don’t get complacent simply depositing your monthly checks as they come in. It’s vital that you sit down and really figure out your finances - on a granular level - as soon as possible.