4 Tips to Manage Money during Retirement

Retirement Financial Planning

This article is for individuals who are about to retire or have retired recently and will now have beautiful years to live to the fullest. To ensure that you get the most out of your savings, here are the tips to manage your money during the retirement period:

Tip-1: Invest and diversify


Note that, if the return on your savings/investments is lower than inflation, then your investment portfolio is poor and you are not financially secure. You should therefore aim for a maximum return. Depending on the country you live in, the inflation should be always be factored in before making investment.

Several financial products exist. The important thing is to diversify your portfolio. The old saying that you shouldn’t put all your eggs in one basket should be a motivational point for you. Diversifying your assets means taking advantage of the performance of those who fluctuate, while reducing the risk of financial loss. For example, exchange-traded funds (ETFs) are an option. In addition, mutual funds can be a good way to diversify risk.

In other words, when you retire, consolidating all your tax-free accounts into a single account and consolidating all taxable accounts can provide a significant benefit to the performance of your retirement portfolio.

Tip-2: Be aware of taxation

Calculate the amount to be withdrawn and when to do so in order to avoid paying too much tax. For example, if you are planning a abroad trip for 3 months and you hadn’t planned this expense. Should you withdraw this amount before or after tax filing season? Talk to an expert who will advise you according to your tax bracket/category.

Tip-3: Prepare for the unexpected

Life is a roller coaster ride and unexpected event can strike anytime! Whether it is an illness, divorce or death, just keep a backup ready and everything should be fine.

Did you know that, if your partner dies and all your current accounts are joint, the money in the account will be blocked until it is legally settled? So make arrangements in advance. No one is safe from an accident. Also provide the necessary powers to the attorney. For example, imagine that your spouse breaks his or her leg and is unable to move. A power of attorney will allow you to handle his/her files.

It is never too late to review or prepare it. It’s may seem to be a very unpleasant thing to do. But when the need arises, it will definitely help the designated person to take care of you and administration of your assets.

Tip-4: Opt for a financial advisor

Your family member or friend (not a financial expert) who you’d often turned to seek financial advice may not be your best option during your retirement period! This is because in this age, expertise can only give you a smooth going. A good financial advisor can enlighten you while respecting your investor profile. However, you should be aware that there is no such thing as a ideal financial advisor.

There are many types of advisors as listed below and you should compare all depending on your retirement goals:

Here is a list:

  • Financial institution advisors: Financial advisors are employees of a particular firm and apart from monthly salary they also receive a commission on the sale of financial products. It is up to you to decide whether the financial products offered are really in your interest or theirs.
  • Independent advisors: They make investments on your behalf, but they are fully paid on a commission basis and have products from multiple companies to sell. Commission means investments that cost you more. These advisors will typically try to sell you a product which offers them a higher commission in return. Their livelihood is after all dependent on the commission earned. Remember it’s a selfish world. The best solution is to check their social media profile.
  • Securities brokers: They ask you to invest a minimum amount to open your investment account. And by doing this, your account then becomes one of the account amongst many of the accounts that the broking firm has. It is similar to a bank. Typically your account will be given attention depending on the invested amount. If the amount in your account is less, will brokers have time for you?
  • Fee-based financial advisors: They are less common and work much like independent advisors. They manage your investments in exchange for a lump sum.

There is no such thing as a miracle investment solution!

The important thing in retirement is to never lose track of your finances. Feel free to seek the advice of an expert so that he or she can help you in the event of unforeseen circumstances. He or she can also optimize your money so that you can enjoy your retirement for a maximum duration.

Happy Retirement!

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