3 Easy Ways Retirees Can Simplify Their Financial Lives

Preparing for retirement feels complex at times, but your financial life in retirement shouldn’t be. The simpler and more streamlined you can make things, the less you have to worry about regularly.

But how, exactly, can you tidy things up? Below we have three easy ways to streamline your financial life and reduce stress in retirement.

Way #1: Consolidate Your Accounts

Consolidating accounts is an excellent way to “clean” your financial house. Over the years, you’ve likely accumulated various assets or accounts that you could easily combine with a little effort. 

The fewer funds you have spread across multiple managers, the easier it is to keep track of your assets. Tax planning becomes much more manageable when you reduce the number of accounts to consider. Plus, you might save a pretty penny on management fees. 

Consolidate common accounts, including:

Retirement Savings: If you have multiple 401(k)s from former employers, consider rolling them into a traditional IRA. When it comes time to start collecting your required minimum distributions (RMDs), having your retirement savings accounts in one place can make it much easier to determine your distribution amount. Remember, not taking out the proper amount could lead to a 50% penalty from the IRS. 

Checking: Do you have multiple checking or savings accounts open at different banks? Choose one location to use moving forward, and close out all the others. Try to select a bank that offers the highest interest rates, so you get more “rewards” for banking at that institution. 

Brokerage Accounts: Choose one custodian, and consolidate all your brokerage accounts into one. 

Insurance: Depending on the type of coverage you have, it can be easier (and cheaper) to bundle policies together under one carrier. Common types of policies to bundle include auto, home, renters, boaters, motorcycle, and life insurance.

Consolidating saves time and hassle by reducing the number of accounts to keep track of and passwords to remember—which could also streamline your digital estate plan. Depending on the asset type, fewer accounts can mean less maintenance and administrative fees as well.

Way #2: Clean Up Excess Spending

Where do you tend to spend a little too much money? Maybe you enjoy spoiling your grandkids, impulse purchasing the latest fashion trends, or jet-setting to an exotic destination. While these are all great splurges that help you enjoy your money, you should consider excess spending carefully before and during retirement.

Think about how you can redirect that spending toward things or goals that really matter. It’s fun to watch your grandson light up when he gets a new video game, but how long does that enjoyment last? Instead of spending in excess to create quick moments of joy, direct that money towards something meaningful, like his college savings.

Bringing intention and purpose to your money helps create a feeling of fulfillment in retirement. Work with your trusted financial partner to strike a good balance between spending, saving, and giving. 

Way #3: Cut Down Your Debt

A common goal for retirees is to be debt-free. The less debt burdened on you in retirement, the more money you have to spend on things that truly matter—traveling, starting a business, giving to charity, etc.

Start by identifying current or anticipated debts. First, you should address anything with a high-interest rate, like credit cards or personal loans. If possible, make additional payments toward the principal to help pay the loan down faster.

Once those are taken care of, focus on low-interest debts like mortgages, car payments or any debt accrued while paying for a child’s education. Again, making extra payments toward the principal is an effective way to draw down debt faster.

Consolidating certain loans can both simplify the loan repayment process and help you get a better interest rate. Rather than write out separate checks every month for your credit card debt and personal loan, for example, you’d only be responsible for managing one payment. Consolidation isn’t the right move for everyone, however, and we recommend speaking with a specialist or your advisor first.

Less Debt Can Leave You Better Prepared

Eliminating or reducing debt before retirement is also a meaningful way to free up your cash flow in the event of an emergency. As a part of your greater retirement income plan, it’s always a good idea to create or pad an emergency fund.

During your working years, an emergency fund is a useful cushion to have in the event of job loss. But in retirement, an emergency fund is essential for covering things like unexpected medical expenses, car troubles, home repairs, and more. Neglecting to prepare for unforeseen costs increases the likelihood that you’ll need to accrue more debt, which impacts your overall retirement income plan and goals.

Bonus: Work With a Team to Build a Retirement Income Plan That Works

One of the most effective ways to simplify your financial life in retirement is to work with a professional. At Goepper Burkhardt, we assist those preparing for and thriving in retirement by developing tailored retirement income plans designed to address their needs and goals.

Let us know what you’d like to accomplish, and we’ll develop a plan to get you there. Reach out to our team anytime to get started.

Retirement Planning
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