October 15, 2019

As I near retirement age I worry more and more if I'll have enough money to last.

Of course no one knows how long one will live but it is important to plan like we will live a long life. After all there aren't too many things more scary than running out of money in your golden years.

I'm learnign more and more that financial planning doesn't end when we retire. The way we handle our money in retirement is just as important.

Once you don't have a regular paycheck it can be harder to bounce back from financial setbacks.

The below is an article on Money Talk News that really got me thinking about some thing I should be doing.

Be Well,
Anisa

As always please reply with your thoughts and comments.
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1. Review estate planning documents

After retiring, it's a good idea to review and update your estate planning documents.

One of the most important of these documents is your will.

If you don't have one, make one. If you have one it is time to review it because life is full of changes.

If you marry, divorce, inherit wealth or purchase property, you may need to update your will to reflect your new circumstances. For example, the birth of a grandchild may prompt you to adjust your beneficiaries.

Reviewing your will after retiring and then periodically thereafter can put your mind at ease about the well-being of your heirs.

If you don't have a will, use your newfound free time to make one. The process can be as simple as going online and using a service such as Rocket Lawyer to generate a will.

Other estate planning documents to review - or create - after retiring may include living wills, power of attorney designations and letters of intent.

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2. Review your beneficiaries

Beneficiary designations are another aspect of estate planning that is critical to ensuring your assets are distributed according to your wishes upon your death.

"When you purchase life insurance or open a retirement plan or bank account, you're often asked to name a beneficiary, which is the person you want to inherit the proceeds when you die. These designations are powerful, and they take precedence over instructions in a will."

So, as with your will, you should review your beneficiary designations upon retiring and then periodically throughout retirement.

3. Prepare for your funeral

No one likes to contemplate their death, but it's important to make sure your loved ones are financially prepared for your funeral. By planning your own funeral, you will relieve your family of the burden of having to plan it while grieving.

Mortuaries and cemeteries are in business to make money. The median cost of a funeral with viewing and burial is $7,360, according to the latest data from the National Funeral Directors Association.

With a little planning, there are plenty of ways to bring that cost down.

4. Reconsider your transportation options

If you have two cars but could get by with one, consider selling one to reduce your insurance costs in retirement. If you retire to an area where you could get by without owning a car at all, even better.

Seniors tend to pay higher insurance rates than younger people.

U.S. households led by someone age 65 to 74 spend $1,180 annually for vehicle insurance, on average, according to the latest consumer spending data from the U.S. Bureau of Labor Statistics. That's the highest of any age group. The average among all U.S. households is $925 a year.

Getting rid of a car will also save you thousands of dollars a year on other vehicle costs. According to a 2018 AAA analysis, it costs $8,849 a year to own and operate a new vehicle when you account for depreciation.

5. Build up your emergency fund

Having money set aside for unexpected expenses is as important for retirees as it is for workers.

An emergency fund can help you avoid prematurely withdrawing money from your retirement savings, which would cost you not just the amount of money you withdraw but any earnings that money might have generated.

Additionally, once you stop working, you will have fewer opportunities to earn extra money to replace the cash you withdraw from retirement accounts for emergency expenses.

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6. Plan for required minimum distributions (RMDs)

You can't keep your money in retirement accounts indefinitely. Required minimum distributions (RMDs) are a minimum amount of money the IRS requires you to withdraw from most types of retirement accounts each year, generally beginning in the year you turn 70½.

You should understand and prepare for your RMD obligations before you reach that age.

If you miss an RMD deadline, or if the distributions aren't large enough, you may have to pay a 50% tax penalty on the amount of money that you didn't withdraw as required.

Additionally, RMDs are generally taxable income. So, they can impact your federal income tax rate as well as the "combined income" formula that determines the extent to which your Social Security benefits are taxable.

The IRS notes that RMDs apply to:

- Traditional individual retirement accounts (IRAs)
- SEP IRAs
- SIMPLE IRAs
- 401(k) plans
- 403(b) plans
- 457(b) plans
- Profit-sharing plans
- Other defined contribution plans

The amount of an RMD depends on your life expectancy and the balance in your retirement accounts. The IRS provides online worksheets to help you make calculations. The Securities and Exchange Commission's Investor.gov website also offers an RMD calculator.

Still, drawing down funds from retirement accounts can be complicated enough to merit the aid of a financial or tax adviser. If you decide to go that route, you can find a vetted fiduciary - an adviser who puts your best interests first - through the free service Wealthramp.

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7. Consider dropping your life insurance

One way you can save money in retirement is to drop life insurance policies. This may be practical if you no longer have people depending on your income.

The main purpose of life insurance is to make sure your loved ones have an income stream if you should die unexpectedly. For people who are raising families, life insurance is often essential to make sure their dependents have enough money to provide for such basics as food and shelter, as well as the cost of higher education.

However, if you are retired, your children are grown, and you don't have a spouse who relies on your income, you may decide that the money you're spending on life insurance would be better spent elsewhere.