12 Steps to Financial Wellness for Retirees

This retirement gig can be pretty challenging. Many retirees are facing financial woes that are both new to them and unsettling. The economy will get better and life will get easier but it may take a few years. Until then, here are 12 steps you can take now to take charge of your financial life:
  1. Determine where you stand. Take a moment and list everything you own and everything you owe. This will give you a snapshot of your financial situation from which you can make intelligent decisions.
  2. Make 2 lists. Pull out your checkbook and credit card statements for the past 6 months and make one list of all ‘non-discretionary’ expenses such as mortgage payment, utilities, insurance premiums and basic groceries. Make a second list of all discretionary spending such as eating out, vacations, gifts and other entertainment. The purpose of this exercise to get a sense of how much you ‘must’ spend each month versus how much you ‘are’ spending each month.
  3. Cut your expenses. Start by taking a closer look at your non-discretionary expenses and you’ll soon realize that you have more discretion than originally thought. For example, you could cut out the ‘premium’ portion of your cable TV subscription or you may be able to do without cable TV altogether. If you have a DVD player, the library has lots of movies you can check out in addition to books and Books-On-CD’s.
  4. List your income sources. This may include Social Security, a company pension and interest and dividends. See how your income matches up with your revised monthly expenses and cut expenses further if needed. 
  5. Create systematic withdrawals. If you have either personal investments or retirement plan investments, consider systematically withdrawing a portion of your principal in addition to interest and dividends. A good rule of thumb for maximum annual withdrawals (including interest and dividends) is: 4% if you’re in your 60’s; 5% if you’re in your 70’s; 6% if you’re in your 80’s; 7% if you’re in your 90’s. 
  6. Review your investments. Currently, many blue chip stocks are paying dividends that far exceed interest rates on bonds or CD’s. Consider investing up to 60% of your investment portfolio in such companies.
  7. Cut your insurance premiums. Various insurance premiums consume much of the family resources. Have your agents review all of your coverage with the mandate to offer suggestions for cutting premiums a minimum of 20%.
  8. Evaluate your home. For most people, maintaining their home is one of their greatest expenses. Decide if you could benefit from downsizing and simplifying.
  9. Eliminate the junk. By retirement, most of us have accumulated lots of junk. If you can sell it, sell it. Otherwise, give it away (tax deduction) or throw it away. You’ll be surprised at the ‘healthy’ feeling this will give you.
  10. Two cars or one? Cars are expensive to maintain and insure. Many retired couples can get by quite nicely with one vehicle and save a lot of money.
  11. Exercise! One big key to keeping long-term expenses low is to stay healthy! Take up daily walking. 
  12. Share your time. Helping others will invigorate you and stimulate your mind. It’s another key to long, healthy living.