You cannot neglect your finances in retirement.
You have recently entered retirement.
You are enjoying some time to yourself with fewer responsibilities.
Even so, there are certain responsibilities you cannot ignore.
According to a recent MoneyTalksNews article titled “7 Money Moves You Should Make After Retiring,” you cannot escape legal matters and financial decisions.
What should you do to manage your affairs in retirement?
Review your estate plan.
Retirement is an important life transition.
Not only do people transition from work to leisure, but there are other changes often associated with this time of life.
For example, some retirees have children married or divorced, experience little folks called grandchildren, or receive an inheritance.
You will want to look over your last will and testament and power of attorney documents to ensure there alignment with your current life circumstances.
Review your beneficiaries.
It has probably been several years since you acquired your retirement accounts and life insurance policies.
Who would you want to inherit or benefit from these accounts when you die?
Has your thinking changed since you last designated your beneficiaries?
You will want to update the beneficiary designation so the proper individuals inherit the important assets.
Prepare for your funeral.
Aging brings us closer to death.
Although this is an unpleasant topic for many, it is a fact of life.
If you have not started planning and making arrangements for your funeral, you should do so in retirement.
By planning ahead, you can save your loved ones money and stress as they grieve your loss.
Cut transportation costs.
Without a daily commute to work, you may no longer need two vehicles.
With a single car, you can save on insurance, gas, and maintenance costs.
Look over your emergency fund.
An emergency fund is beneficial at any life stage.
It can be especially important in retirement.
This fund can protect you from having to dip into your retirement accounts to pay Medicare deductibles and other cash calls.
Making withdrawals from a retirement account can cost you in potential growth and in taxes.
Consider Required Minimum Distributions (RMDs) and taxes.
Required minimum distributions are an important consideration in retirement.
If you have a traditional IRA, you will have to start taking required minimum distributions after you turn 72.
You will incur a 50 percent tax penalty if you fail to do so.
When you take a required minimum distribution, it will be taxed as ordinary income along with your Social Security benefits.
Evaluate your need for life insurance.
The primary purpose for life insurance is to account for the loss of income from the death of a breadwinner.
Life insurance can allow children to attend college and cover daily household expenses.
If you are no longer working and your children are grown, you may no longer need a life insurance policy.
You may be able to save money on these premiums by letting your policy lapse in retirement.
However, this is a decision that should not be made lightly.
Be sure to consult with your financial advisor.
Teaching point: I have never had a widow complain to me about the life insurance her husband owned at death.
Although you know longer have the responsibilities of a career, you cannot neglect your financial duties in retirement.
Reference: MoneyTalksNews (Oct. 9, 2020) “7 Money Moves You Should Make After Retiring”