Well, you made it. But even though you’re now in retirement, this is not the time to take your eye off the ball in terms of retirement stewardship. In fact, other than the early saving/investing phase of your life, this may be the most important in terms of ensuring that you can steward your retirement well. And, in addition to your financial situation, it is also important to keep focused on the other things that are really important, especially your health, family, giving, and serving others as long as God enables you to.
Keep working if you desire and are able.
This may be more important than you think. If you read my free eBook, you’ll remember that Principle #2 is Embrace Work. God created you to work. So, unless you aren’t able to work due to health reasons, consider finding something productive to do in retirement. This doesn’t have to be a full-time, paid position. You can start your own business, or you can work part-time or even volunteer your time in any number of ways. There are many people, churches, and organizations out there that need you!
Don’t stop giving.
Factor giving into your spending plan in retirement. This may be a little trickier since you may not be working and earning an income. In terms of tithing, you should continue to tithe on any retirement income you receive (investment income, pensions, annuities, and Social Security) unless you have (technically) already paid a tithe on it. (An example would be an annuity payout that is based on a principal lump sum which you “annuitized” and was accumulated after you had paid tithe on it when it was originally received, perhaps as income.) Also, depending on your assets, you may want to make other gifts to family members, your church, and other ministries or charities in your community.
One of the blessings of retirement is having more time to do certain things than we did when we were working full-time. So if you’re able, keep serving in the context of your local church as well as others as God leads. If you are in poor health, find ways to serve others that don’t involve too much activity. If nothing else, you can pray for others and their needs.
Have some fun.
Assuming that you are in reasonably good health, get up, get out, and have some fun. Take a trip. Go fishing. Learn to dance. Make some time to enjoy yourself, perhaps doing the things you’ve always enjoyed or something brand new. This can be one of the blessings of retirement – you have more discretionary time to spend however you choose. Sure, some of it should be spent on productive activities that serve others, but it’s okay to do some things for yourself as well.
Start receiving Social Security benefits.
Depending on when you decide to retire, but sometime between the ages of 62 and 70, apply for and start receiving Social Security benefits. You’re not eligible before 62 unless you’re disabled, and there is no real advantage to a delay past age 70. And remember, you can maximize Social Security payments by delaying benefits until age 70, if possible. If you can meet your income requirements with income from savings and by continuing to work after you retire, you’ll be able to receive significantly more income from Social Security in the future. You also need to decide about spousal benefits. This is one of the more complex areas of the Social Security rules, so we won’t get into it here, but suffice it to say that you need to look at it very closely.
Maintain a budget.
That may be more important than ever. Keep an eye on your spending, especially if your income in retirement is less than it was before. A budget is a great way to do that, and there are lots of ways to set up one. Many financial institutions offer budgeting and tracking as part of their online services, and there are other tools like Mint.com that make it relatively easy as well. (I also like Quicken, You Need a Budget, and Every Dollar, which is Dave Ramsey’s new budgeting product.) A simple spreadsheet will also work, but if you want a more sophisticated approach, many banks still offer online banking via Intuit’s Quicken personal money management software. Just find what works for you and stick to it.
Keep a wary eye on your investment fees.
Regardless of whether you have a fee-only advisor or are a do-it-yourself investor, keep an eye on investment fees you are currently paying in your retirement accounts. In retirement, it may make sense to switch to lower-fee funds or a lower-fee advisor as it adds up over the long haul. If you still have money in an old company 401(k) or 403(b), consider rolling it over into an IRA to save costs. (Plus, you’ll likely have more investment options.)
Think about rebalancing.
This mainly pertains to people who manage their own retirement investments and has to do with maintaining your target asset allocation percentages in your portfolio. Notice that I didn’t say “rebalance once a quarter, or each year, or every other year.” That’s because there is no one-size-fits-all rule of thumb. Some recommend rebalancing regularly and some not at all. This is too broad a subject to address here, so it’s probably something to research on your own or discuss with your financial adviser.
Reevaluate any life insurance policies.
In all likelihood, you have some outstanding life insurance policies. Now is a good time to reevaluate your need for them. You may have reached a point in your life where you are essentially self-insured (self-insured in the sense that you are no longer dependent on your ability to work to provide the income your surviving spouse or dependents would need to live on) and therefore don’t really need insurance any longer. If that’s the case, deciding what to do with these policies can be a little complex, so I strongly suggest that you check with your financial advisor and/or insurance representative before making any decisions. In most cases, Term Life policies can simply be terminated, but more complex Whole or Universal Life policies will present more complexities. If you have held them a long time, they may have accumulated a cash value that could help you in retirement.
Stay out of debt.
Minimize the amount of debt that you carry, especially high-interest debt, such as credit card debt. If you do carry such debt, make a plan to aggressively pay it off. If you don’t go after your debt right away, it could end up weighing you down for the rest of your life.
Factor in the family.
Review the support you currently provide to family members, such as parents or adult children, and consider whether it is negatively affecting your own financial security and the ability to pay your own bills in retirement. If it is, consider whether it makes sense to continue to provide such extensive support, or if there’s an alternative.
Pay attention to wellness (physical health – diet and exercise).
Remaining healthy as long as you can positively impact your quality of life in retirement as it will enable you to continue to do the things you want to do in retirement. It will also impact your expenses as it is widely recognized that health care expenses, over and above Medicare costs, will take a significant percentage of retirees’ income. Fidelity Investments estimates are as high as $220K per person during all of your retirement.
See if long-term care insurance is right for you.
Consider whether you should buy long-term care insurance. As with many financial decisions, there is a lot to be considered in making this decision, not the least of which is its relatively high cost, strict underwriting standards, and complex coverage descriptions. It is usually much less costly if purchased earlier, say in your 50s, but that also means that you pay the premiums for a longer period of time. If you are in poor health with limited resources, it may be a good choice. If you are in good health and with significant resources, it may also make sense to protect those resources.
Review your retirement income plan.
Most retirees will use a combination of income from Social Security, savings, and perhaps a pension or annuity to fund their retirement. Most of these provide a fixed-income stream, with the exception of withdrawals from savings. Since you probably need your savings to last as long as you do, it’s a good idea to reevaluate your withdrawal strategy at least annually. You may need to make adjustments depending on interest rates and market performance.
Check out a pension alternative.
Investigate whether purchasing an annuity would benefit you in retirement. People without pensions may benefit from the steady payouts that annuities provide, at least in terms of ensuring that you have an income “floor” in retirement that is not at risk due to market fluctuations. There are a wide variety of annuity products available, and they can be highly complex and also quite costly. As with other complex financial decisions, it’s best to work with an advisor that you trust. I have posted several articles about annuities and establishing an income “floor” in retirement on the blog.
Guard yourself against scams by avoiding offers that sound too good to be true, not sharing your Social Security number and other personal information online or with strangers, and reporting any suspicious charges on your bank accounts or credit cards. Also, don’t ever give anyone direct access to your accounts, and only deal with financial services representatives that you trust. A good safeguard is to talk to friends or family members about any major financial decision you make before you finalize it. This is especially important for major gifts, investing in a new financial product, or some major purchases. One of the biggest mistakes that people make is investing in products that they don’t really understand.
Make sure you have your affairs in order.
Only God knows our appointed time, so in terms of having our affairs in order, we need to plan as though it’s tomorrow. I’m not trying to be morbid, just realistic. By “getting your affairs in order,” I mean things like a will, a health care power of attorney, a financial information letter, etc. Hopefully, you have written a will at some point in your 20s or 30s, and also created a durable power of attorney and healthcare proxy documents. If you’ve never done these, you definitely need to take care of that now. If it’s been some time since you did them, it’s best to revisit and redo them as necessary as your life circumstances and wishes have probably changed over the years. You will enjoy the peace you will have in later life knowing that you have a plan of action already in place.
Let thoughts of heaven consume more and more of your time.
As we get into our 60s, 70s, and 80s, the reality is that we are getting ever closer to the day when we will leave this life and enter the eternal life in heaven that God has promised us. I don’t think there’s anything morbid or wrong about thinking more and more about heaven as we grow older. After all, in many ways, heaven and the new heavens and new earth is our ultimate and final destiny in Christ, not our lives on this earth. Heaven gives us hope that the difficulties and challenges we will face as we age will be temporary and are simply the glide path in this life toward our final, eternal home. Knowing this will help us to persevere in hope, knowing that our trials and tribulations are only temporary, and not to be compared with what will be revealed (see Romans 8:18).