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How to Organize Your Finances as a New Retiree


It's important to make sure you keep your finances organized during your retirement years to remain comfortable and continue pursuing your goals. Image: Towfiqu barbhuiya | Unsplash

If you’ve finally reached retirement, congratulations! This is yet another chapter in life you must learn to navigate, as you’ll suddenly have much more time to spend with your personal interests. This could mean you dive deep into a hobby, plan to travel more or find a new part-time job to stay active. Whatever your path may be, you’ll want to make sure you keep your finances organized during your retirement years to remain comfortable and continue pursuing your goals. Here are some tips for staying financially savvy as a retired adult.

Review Your Retirement Savings and Sources of Income

If you’ve decided it’s about time to retire, you should make sure that everything is in order and the timing is right. Keep in mind that you’ll need to be a certain age to receive Social Security benefits. It’s also wise to have your larger debts, such as mortgages, car loans and more, paid off before you retire.

A retirement plan and budget should also be in the works to confirm that you’re ready to live comfortably without a steady income. Start by calculating your monthly expenses and then add in your discretionary funds or “wants.”  Think about the things that you want to accomplish during your retirement or just bring you joy. This could be a shopping trip, a source of entertainment, going out to eat or traveling, for example. 

Next, you’ll want to determine all your sources of income during this period of time. Typically, individuals have some mix of these streams of income:

  • Social Security Benefits: Your earnings from Social Security can kick in at age 62 at the earliest, but waiting even longer can ensure that you have all the benefits of full retirement.
  • Retirement Accounts: The accounts that you’ve been saving for throughout your whole time in the workforce will finally see the light of day! You’ll be able to withdraw money from your 401(k) once you reach 59½ without penalties. If you have an Individual Retirement Account (IRA), you’ll most likely be required to withdraw funds at the age of 72. Keep in mind that many of these accounts, with the exception of Roth 401(k)s and IRAs, will be taxed when they’re withdrawn from. 
  • Pension Payments: In our day and age, pensions are becoming less of a norm for retirement plans, but they’re common in specific career paths, especially in government organizations. The amount that you receive monthly is determined by your years of service, salary, and age.
  • Other Sources of Income: You may want to continue a part-time position in your retirement, which would help you stay active and keep money coming in. Another source of income may stem from your investments. At this point in time, you may want to take a look at what you can do to invest in stocks that are less volatile and that have a more secure Return on Investment (ROI). 

Once you have a good idea of what income you’ll have access to in retirement, you can plan your everyday life and savings goals accordingly.

Consider Downsizing Your Home

If you’ve been living in the same house you raised your kids in, you may want to downsize for a more manageable space. With changes to your financial habits and a lower income, you may see changes to your credit score or an increase in your debt-to-income ratio. This could affect your ability to borrow money, so if you plan to move homes in your retirement, you may want to consider other mortgage options like loans backed by the FHA (Federal Housing Administration). This may be beneficial as they offer lower down payments and interest rates, and approve those with lower credit scores. 

If you already have a home paid off, downsizing to a smaller house with fewer bedrooms will mean you’re pocketing the difference as well. You may also want to consider moving into a retirement community, as this will mean you don’t have to worry about home upkeep and maintenance.

Determine Where You Can Save

Making smart financial decisions and looking for ways to cut costs in your day-to-day life is a great practice to adopt at any age. In retirement, you may want to look for ways you can downsize or pinch pennies, as you no longer have as much income to rely on. 

If you and your spouse still own multiple cars and some sit idle in your driveway, consider selling a vehicle. This will help you pocket some extra money, and you won’t have to pay as much for auto insurance. Consider shopping online, using senior discounts or selling some extra furniture or knick-knacks in your home. Lastly, you can better plan out your meals for the week so that you save money at the grocery store, or plant a garden for fresh produce.

Leave Room In Your Budget for the Things You Enjoy

If you’re looking for fun ways to be social and occupy your time, you can volunteer in the community or join groups based on your interests. Many older adults join book clubs, quilting groups or religion-based organizations. These are great ways to engage with others and continue pursuing your interests, whether they’re creative activities or more active ventures.

Make sure that you leave room in your budget for the things that make you happy. If you have bucket list destinations that you still want to travel to, create funds for your trip and research ways to save on these expenses. Traveling in the off-season and looking for package deals may help you achieve these lifelong goals. You may want to have yearly tickets to your local theater or a season pass for your favorite football team. Retirement is meant to be spent pursuing your interests and spending valuable time with friends and family, so make sure that you make the most of it!

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