Organizing Your Finances For Retirement

Organizing Your Finances For Retirement

You have reached the point of your life where retirement is approaching. Just one or two more years and you can slow down to enjoy the rewards of your hard work. Many people who are close to retirement have not organized their finances before they retire. When they start it, they end up disappointed because their financial reality is different from what they expected.

Everybody’s retirement goals are unique to them. Taking the steps below is a great way to organize yourself so that you are ready and comfortable with what your retirement will look like financially. Sitting down with a financial advisor for any of these steps can be an advantage, since they have the experience and resources that you may not be aware of.

Essential Steps

  1. Map out your current finances
  2. Find money by closing out unnecessary accounts
  3. Review your savings and investments
  4. Shop for new insurance rates
  5. Consolidate investments and credit cards
  6. Update your will, trust, and beneficiary information
  7. Inform your executor and/or family of your intentions

Understanding The Steps

  • Map out your current finances: To organize your financial future, you first need to know what your current finances are. Gather all of your bills and financial documents to see the whole picture in front of you. Look at other expenses like that morning coffee or buying lunches at work. You want to see what it all looks like to know what is coming in and what is going out.
  • Find money by closing out unnecessary accounts: Once you see the whole picture, prioritize your bills. Determine what is necessary, what is desired, and what can be closed out. You may even find previous 401k’s or other investments that you have forgotten about. To help with this, there are websites that can help you find dormant accounts that need to be closed. Your retirement budget may be different than your current one. The goal is to minimize your monthly expenditures to enjoy retirement. By finding this money now, you can make it work for you while you are still working.
  • Review your savings and investments: With this found money from your closed out accounts, use it to increase your various savings and investment accounts. A healthy savings plan is to put 10% of your income into a retirement savings account, 401k, or Individual Retirement Account (IRA). If you are already doing this, using this found money to increase your percentage to as little as 11% or 12% can make a big difference.

    Learn what your social security retirement payment will be to help you plan your income. Knowing how this benefit will work into your monthly income can help you better strategize your personal savings payments.

  • Shop for new insurance rates: You may have had your insurance policy for years. They may have even dropped your rates since you first started with their company. Yet there may be another insurance policy that covers you just as well, for a lower cost and covers gaps in your policy that you may need. It will not hurt you to shop around for life, auto, medical, and your other insurance coverages. Every insurance company has their own methods, coverage advantages, and discount programs that may benefit you.

    About 50% of Americans can expect to require long-term medical care after the age of 65. This can be in the form of in-home therapy, moving to an assisted living facility, or other long-term care programs. Preparing your financial plan for possible late-stage medical care can protect you and your loved ones from this financial burden. Understand what limits your current insurance policies have to find coverage for your care.

  • Consolidate your investments and credit cards: Once you retire, your income may be lower than what you are currently accustomed too. Consolidate your investments to give you the biggest monthly or quarterly returns you can get.

    If you have more than one credit card, you may want to consolidate that debt onto one card. You can save money on your monthly payments compared to making payments on multiple cards. Remember, your ultimate goal is to maximize your income and minimize your monthly budget.

  • Update your will, trust, and beneficiary information: You and your beneficiaries may have changed their information since you first set it up. Your children may have moved, your daughter may have changed her last name, or you may have grandchildren that you want to make sure are taken care of.

    Contact your lawyer and your investment firms to update the beneficiary information to make sure it is current to avoid complications later on. Beneficiary information listed on your various accounts can supersede your will. Make sure your beneficiary information on your accounts matches up with your will.

  • Inform your executors and/or family of your intentions: A will or trust can only say so much. Have a discussion with the person who will be responsible for executing your will to let them know what you want and how you want it done. You may also want to create a list of accounts for them to save in a secure place, so that your executor will know what to do without surprises.

Making A Plan That Works

Going into retirement can be fill you with fear due to uncertainty. By following the above steps by creating an income plan can waylay that anxiety. Educating yourself on how your investments will pay out and what your retirement budget will look like is the best way of preparing for your future.