Making the shift from earning a regular paycheck to subsisting entirely on retirement savings can be a shock for even the most confident retirees.
Even if you’ve saved for retirement your entire adult life and are reasonably sure that you have enough to get by, financial stress can still creep up. Luckily, there are many relatively easy ways that retirees - and near-retirees - can improve their finances.
Keep managing your money.
Once you’ve crossed that retirement finish line, it might feel as though your days of reviewing your accounts and managing your money are behind you.
But that couldn’t be further from the truth.
Now that you’ve made it to retirement successfully, you need your financial advisor more than ever. Continue to work with him or her closely so that you can keep an eye on any developments that need attention - say, if you’re withdrawing too much from a particular account, or if you’re not taking advantage of solid, low-risk investment opportunities.
Don’t retire all at once.
If you haven’t yet retired but are close to doing so, consider retiring gradually. That can mean different things for different people.
For some, that might look like going to the office just three days a week, or working primarily from home. For others, that might mean retiring completely from one career, only to start a new business or take on some part-time consulting work.
Retiring like this can give you a longer runway when it comes to living solely on your retirement savings. That can be very comforting for some.
And even if you’ve been retired for years, you can still jump back into the working world if you want to. Some retirees find that retirement gets stressful or boring, and welcome the chance to develop a business or learn the ropes of an encore career.
Take advantage of passive investing.
With all the time you now have, you might be tempted to take an active approach to the stock market in order to maximize your retirement savings.
Searching for the best actively managed investment fund and scoping out the market can be a fun hobby, but it’s no way to reliably improve your retirement finances.
Instead, the best bet is to rely on stock and bond index funds, which are constructed to track a market index. They’re predictable, which is of great importance when it comes to your retirement savings.
Convert unprofitable assets, like unnecessary life insurance policies, into something better.
Many seniors don’t know it, but their life insurance policies are assets just like a house or car. As such, they can be sold.
This kind of transaction is called a life settlement, and it involves selling a qualified life insurance policy to investors for a lump sum of cash. Seniors work with their financial advisor and a life settlement broker, who will create a bidding war for the senior’s policy to ensure that the senior receives the best possible offer.
Once an offer is made and accepted, the senior receives payment in a lump sum of cash. That cash can be used for anything - including padding a retirement fund.
Wait to file for Social Security
Many seniors file for Social Security either once they reach full retirement age, which is 66, or as soon as they’re able to file, which is age 61 and 9 months.
However, if you delay filing, you’ll receive bigger checks. If you delay your filing until age 67, you’ll receive 108 percent of your benefits. Delay even longer, until age 70, and you’ll receive 132 percent of your benefits, according to the Social Security Administration.
You’ll want to talk over this option with your financial advisor, because delaying isn’t necessarily beneficial for every senior. For example, if you live the average lifespan, the SSA estimates that you’ll still receive about the same amount in lifetime benefits whether you start collecting at age 62 or 70.
Even the most financially savvy senior can start feeling financial stress during retirement. Taking these steps - including deciding whether a life settlement might be right for you - can help reduce that stress, and propel you toward a more secure retirement. Learn more about whether you might qualify for a life settlement here.