Bookmark these savvy tips for a successful year.
Retirement can be an exciting time. "I think there is a lot of stuff people put on their bucket list," says Teri Dreher, a registered nurse, owner of NShore Patient Advocates LLC in Chicago and author of "Patient Advocacy Matters." However, retirees may not be able to check off those list-worthy pursuits if their finances or health begins to decline. And aside from achieving economic security, in order for the golden years to be a happy and fulfilling time for retirees, maintaining relationships and hobbies, among other non-financial steps, is crucial. With that in mind, here are 10 tips to help you sidestep common pitfalls and achieve the retirement you've always wanted in 2019.
Tune out financial news.
The last few months have been rocky for investors, but retirees should ignore the headlines, says Oscar Vives Ortiz, a wealth strategist with advisory firm PNC Wealth Management in Tampa, Florida. "A lot of people focus on the numbers published by the media," he says. But those numbers don't reflect individual assets and retirement strategies. Rather than panicking over the recent market volatility, review your investments to make sure the level of risk is appropriate for your goals and stage of life. If you need to make changes to your portfolio, avoid making impulsive decisions based on the day's news.
Pare down expenses to match your guaranteed income.
Most retirees have guaranteed income in the form of Social Security benefits, a pension or an annuity. Ideally, seniors should be able to pay all their fixed expenses, such as housing and insurance, from these fixed income sources. Being able to do so will help you avoid the need to withdraw from an investment portfolio in a down market. "One of the worst things you can do is sell (stocks) at a low," says Steve Vernon, author of "Retirement Game-Changers: Strategies for a Healthy, Financially Secure, and Fulfilling Long Life." If your fixed expenses exceed your fixed income, consider how you can adjust your budget to align the two in 2019.
Keep some of your money safe and liquid.
Another way to avoid pulling money out of investments that have lost value is to keep a certain amount of cash liquid in places such as savings or money market accounts. Beth Blecker, owner of advisory firm Eastern Planning Inc. in Nanuet, New York, recommends keeping enough money liquid to cover three to five years of expenses. That should help retirees ride out any recession. If you don't have that much in liquid assets already, Blecker says withdrawing money from a portfolio must be done carefully. "You don't want to do it all at once, and don't do it on a down day," she says.
Consult with a financial professional.
To avoid making a costly mistake, such as locking in losses by withdrawing money during a down market, work with a trusted financial advisor. A professional can also help ensure your money is placed in the appropriate mutual funds. Vives Ortiz often asks clients if they would rather make a lot of money or sleep well at night. Those who are interested in maximizing returns are best serviced by placing money in aggressive funds, while those who prioritize peace of mind may be directed to conservative investments that are traditionally insulated against losses. However, it doesn't have to be an all-or-nothing proposition. Depending on your goals, a mix of investment risk levels might be right for you.
Update your estate plans.
No one wants to think about end-of-life financial arrangements, but having the best year possible means knowing your loved ones will be in good hands even if you're not here to care for them. Blecker says people often make the mistake of skipping estate planning because they don't have enough assets to trigger estate taxes. "It's much more than estate taxes," she says. "It's what money is going to whom." Make sure your will is updated and the beneficiaries on all your financial accounts are correct.
Find a purpose in life.
Whether this is your first or 15th year of retirement, you need to have a plan for how you'll spend your time. "A job isn't only a source of income. It's a source of social interactions and relationships," Vives Ortiz says. Without a job, it's important for retirees to find a way to create fulfilling connections and foster mental stimulation. That could be through hobbies, social clubs, volunteer work or even a part-time job.
Relocate to a new home.
Social isolation can have real and adverse effects on senior health. More than one in five elderly adults are isolated from family and friends, according to a University of Michigan study released in 2018, and those seniors are at a greater risk for poor mental and physical health as well as a higher rate of mortality. "That house in the suburbs can be deadly," Vernon says. When relocating, he suggests retirees take into account public transportation or nearby amenities that can help them stay active and connected.
Adopt a pet.
Retirees who live alone are at greater risk for isolation, and while human interaction is important, adopting a pet can also be helpful. "It gives you a purpose," Dreher says. Older pet owners are 36 percent less likely than non-pet owners to report feeling lonely, according to 2014 study published in the journal Aging & Mental Health. Pets aren't for everyone, though. Seniors who want to travel may find a pet inconvenient, and retirees should have a plan for who will care for their pet when they no longer can.
Stay active, even at the hospital.
Despite your best efforts to stay healthy, you might still find yourself in the hospital in 2019. If that should happen, Dreher advises staying proactive about maintaining your strength. If possible, get up and move around regularly throughout the day. "Don't get too weak that you have to go to rehab," Dreher says. If you don't prioritize maintaining your strength, it could translate to expensive medical bills and a reduced quality of life.
Spend some money.
If you want to have the best year of retirement possible, you need to be willing to spend a little money. That's something Blecker says can be a struggle for her clients. "The savers have a hard time not saving anymore," she says. They are afraid of running out of money, so they don't spend anything. "It's important that we're not doing everything for tomorrow," Blecker says. So, take the trip, go out for dinner and splurge a little on yourself in 2019.
Make 2019 your best year of retirement yet.
To recap, here are 10 tips for making sure you have a successful, fulfilling and financially secure retirement in 2019:
-- Tune out financial news.
-- Pare down expenses to match your guaranteed income.
-- Keep some of your money safe and liquid.
-- Consult with a financial professional.
-- Update your estate plans.
-- Find a purpose in life.
-- Relocate to a new home.
-- Adopt a pet.
-- Stay active, even at the hospital.
-- Spend some money.
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