No matter how much of a nest egg you’ve saved up for retirement, it’s important to maintain a sharp financial focus even after you’ve left the working world. This means being smart with your money – not just in terms of how you spend it, but how you manage and grow it in retirement.
Part of your focus should be avoiding common mistakes in retirement that could cost you money down the road. Beyond that, you should look for ways to bolster your savings with an eye toward remaining financially secure during what could be a decades-long retirement.
Here are seven money moves to help keep your retirement funds secure.
Delay Claiming Social Security
Although you can file for Social Security benefits as early as age 62, the best move is to wait as long as possible. For example, research shows that waiting until age 70 to collect instead of age 62 will boost your monthly payment by more than three-quarters. If nothing else, you should at least wait until full retirement age to ensure you get the full benefits you are due.
Stay Organized and On Budget
This is a good idea no matter your age, but it’s especially important in retirement. Shawn Plummer, CEO of The Annuity Expert, recommends making a list of assets such as bank accounts, retirement accounts and insurance policies. If you have multiple checking or savings accounts at different banks, consider combining them into a single account to get the best service, convenience and amenities. You can do the same thing if you have multiple IRAs or 401(k) plans. Similarly, minimizing your expenses (e.g., using one credit card rather than several) can simplify your budget and make it easier to stick to.
Keep Cash and Bonds at the Ready
According to a blog on the Synovus Financial website, it’s a good idea to put a certain amount of your portfolio into cash and bonds to protect yourself in the event of a prolonged stock-market slump. Synovus recommends keeping one to three years of cash in the bank and an additional three to five years of bond investments to cover living expenses.
Hire a Financial Advisor
If you have the money to do so, enlisting the help of a financial advisor can help you navigate various strategies to both protect and grow your wealth. This is particularly important if you have money in many different assets.
Consider Target-Date Mutual Funds
If you can’t afford a financial advisor, there are ways to adopt a “set it and forget it” investing model that can grow your money without professional help. A target-date fund is a type of mutual fund with a specific end date, often aligning with when you plan to retire. For example, if you plan to retire in 2040, then you would buy a 2040 target-date fund. The fund matures and rebalances at set intervals — usually five years. In the case of retirees, your strategy might be to focus on more conservative returns to protect your money against market volatility, according to Moneywise.
Look Into Long-Term Care Coverage
As Synovus noted, one reason many retirees fear running out of money is the potential for a large and unexpected medical expense. To protect yourself, one option is to get a long-term-care insurance policy or hybrid life insurance policy that will pay out if you have a long-term-care event. Another option is a longevity annuity, which is an insurance product that requires a lump-sum investment and will provide a steady stream of retirement income.
Don’t Be Afraid to Take Risks
Reaching retirement age doesn’t mean you should stash all of your money into a savings account that pays 0.01% interest. As the past couple of years have proven, high inflation can put you in a negative financial situation that might take years to crawl out of. It’s okay to put some of your money into higher-risk stocks that could provide a major financial payoff 10 or 15 years down the road. The important thing is to maintain a good balance between secure investments and riskier ones.
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