4 Tips for Seniors Planning for Retirement

/ / Reverse Mortgage

4 Tips for Seniors Planning for Retirement

The decade before retirement can matter more to retirement success than any other time. With good planning, there is still time for seniors to accumulate money for retirement, especially for those who started saving later in life.

Here are some steps to help seniors get their affairs in order to plan a comfortable retirement:

1. Plan out life and figure out needs accordingly.

After seniors stop working, it is essential to understand life in the present for a successful savings plan. Having a clear vision about day-to-day life, even down to the activities you want to do every year (like traveling to see kids and grandkids), will help determine financial goals.

Once that’s figured out, they can start budgeting accordingly. The budget can always change it as new events occur.

But, keep healthcare and taxes in the budget and the vision. Regarding taxes, after age 72, seniors must take minimum distributions from qualified retirement accounts, which can move them to a higher bracket. So make sure to understand your income flow throughout retirement.

2. Flip the financial focus and seek stability.

Put frankly, seniors have been spending most of their time focusing their finances on their families. Now’s the time for them to focus on themselves.

At the same time, the decade for retirement is NOT the best time for big life changes. New cars, houses, and other significant expenses are costly and can create new debt when you need to be saving.

Some changes cannot be avoided, like health issues and natural disasters. But taking care of the things you have control over is important.

3. Insulate investments and prepare for the unpredictable.

As seniors prepare for retirement, they should become more careful with their investment portfolio to protect projected income flow. If they don’t have one, an investment portfolio will help meet your financial needs for the rest of your life.

Also, make sure that buffers are built so that they can weather these changes with ease. Even the most secure of plans can suffer in the face of significant unexpected events.

One important rule of thumb is having at least six months or a year of living expenses in liquid assets. Also, even though it is uncomfortable, make sure estate plans cover unanticipated situations like the untimely passing of themselves or their spouses.

4. Dispatch debt and strengthen savings.

Also, it is crucial to build up savings leading into retirement. However, how much you need is not always clear.

They can take advantage of opportunities like catch-up payments on 401(k) contributions and IRAs as much as possible.

And lastly, debt and retirement are not typically a desirable combination. No one wants to have debt with different interest rates (like adjustable-rate mortgages) when a fixed income is involved.

However, there may be situations where debt is acceptable in retirement, like taking out a reverse mortgage.

Considering the rising costs of everything, the stock market’s uncertainty, and its effects on retirement funds, a reverse mortgage is an excellent solution to preserving a retirement portfolio and a person’s cash flow.

Although a reverse mortgage is considered a debt, it is a debt that doesn’t affect monthly cash flow because no monthly payment is required. Using a reverse mortgage to pay off high-interest credit cards or loans could increase cash flow and eliminate pulling from savings.

Learn more about reverse mortgages here.

The more seniors plan for retirement, the more they’ll be able to enjoy it. Don’t hesitate to contact us if you have any questions or want more information.