Key Takeaways:
• Schedule automated withdrawals on the same day(s) each month to maintain consistency after leaving work.
• Build a weekly routine around health, relationships, learning, and service to maintain a sense of purpose and keep energy high throughout the year.
• Protect your retirement funds by consolidating accounts and planning ahead for increased healthcare costs.
• Avoid scams by deleting suspicious emails, not clicking links from unknown sources, and not giving out your bank password(s) or other sensitive information through email or over the phone. Your bank will never call and ask for your password.
Retirement is a significant milestone, but it often brings mixed emotions. Individuals gain more time but lose the structure and predictability that come with a work schedule. If you’re feeling unsure of what to do with your newfound freedom, understand that it’s completely normal to feel this way. Developing a plan can help you become more comfortable.
All you need is a reliable monthly paycheck from your combined benefits and savings, a routine that supports your needs and desires, and a few layers of protection for your money.
In this guide, you’ll learn how to manage your money and time during retirement, and how American Hartford Gold can add value to your portfolio.
Evaluate Your Budget and Income
Your spending during retirement will look slightly different than it did while you were working. Your transportation costs will likely decrease, while health and travel costs may increase. List your current bills, then add the new goals you want to save for.
If you want to travel more during the first few years of retirement, for example, plan to set aside some money for that. Next, take a look at your steady income sources, like Social Security. After that, you should estimate how much you’ll need to pull from your savings each month to cover what those sources don’t.
Your Retirement Paycheck
Choose a primary checking account where Social Security and any other benefits or income sources are deposited. Then, select one day each month when you transfer the amount needed from savings to cover the rest of your budget. Many retirees prefer the first or the 15th, so the payment schedule feels familiar. You can automate this transfer to ensure timely deposits.
Keep one month’s worth of expenses in your checking account and a few months’ worth in your savings account for easy access in case of emergencies. If your expenses are higher in certain seasons, plan for slightly larger transfers during those months. If your expenses are lower, you can save the excess for when those more costly months come back around.
Prepare for Taxes and Required Withdrawals
Traditional IRAs and 401(k)s are normally taxed like ordinary income at the time of withdrawal. Roth IRAs can offer tax-free withdrawals under certain conditions.
Account Strategy and Mandatory Distributions
The order you pull funds from any accounts can affect your tax obligations. If you expect to be in a lower tax bracket this year, pulling more money from a traditional IRA might make sense.
If an event pushes you into a higher tax bracket, leaning on Roth or taxable savings funds could be the better move since you paid taxes on these funds already and they withdraw tax-free as long as the conditions are met.
Retirees must take required minimum distributions (RMDs) from traditional IRAs and workplace plans, typically starting at age 73. If you already cover your budget from other sources, you can still take the mandatory distribution and save it.
Navigate Medicare and Other Health Costs
Healthcare is an important part of retirement planning because these costs can be unpredictable, especially as you get older.
Medicare enrollment for most retirees is at age 65. The main coverage categories are Part A, Part B, and Part D:
• Part A: Covers inpatient care, nursing facilities, hospice care, and certain home health services.
• Part B: Covers outpatient care, doctor visits, ambulances, mental health and substance use disorders, and oxygen equipment.
• Part D: Covers many types of prescription drugs.
Those lists are not exhaustive. For a comprehensive list, review your plan details. Many people also purchase a Medigap policy to help cover costs Medicare does not cover, or they join a Medicare Advantage plan. Healthcare plans have enrollment windows; late enrollment can result in penalties.
If you travel or live in another state for part of the year, research how your coverage works if you need to use it while away from home. Health costs tend to rise faster than others, so plan and budget accordingly.
Explore Part-Time Work, Volunteering, and Hobbies
Some retirees take on part-time work because they like being part of a team or want to save some extra money. Others volunteer for a cause they care about or pick up a hobby. Hobbies can grow into big projects or simply remain low-stress, leisurely activities.
Try a four-week workshop before committing to a semester-long course. Help at one nonprofit event before signing up for the weekly shift. Join a friend’s book club for one day to see if it’s a good fit before becoming a member. Keep what you love. Adjust or drop what you don’t.
Protect Your Money and Identity
Fewer accounts are easier to keep track of. When you can, consolidate old workplace plans to make funds easier to manage. Use strong passwords, and enable two-factor authentication wherever possible. Consider freezing your credit until you need to use it, so new accounts cannot be opened in your name without your approval.
Review transaction history regularly to detect unauthorized charges early, and file important documents in a secure, digital folder accessible only to you. You can also add a trusted contact to your accounts if your financial providers offer that feature. This does not give another person control over your money. It gives your provider someone to call if something seems off.
Documents, Delegation, and Avoiding Scams
Organize documents like wills, powers of attorney, and health directives in one place. Tell the people you trust most where those documents are. If you use a password manager, store the master code in a sealed envelope in a safe location with clear instructions. Taking these steps helps family support you if you ever need it.
Delete suspicious emails or texts from unverifiable sources. Scammers often target older people and try to scare them by making up lies so they will send money in their moments of weakness. If you get an urgent message about your account, do not click any links or contact any numbers provided.
Instead, call the company using a number you look up and verify yourself. Do not give out your bank password(s) or other sensitive information, like a social security number, through email or over the phone. Please note that your bank will never call and ask for your password, among other things.
Additionally, the IRS will never call you to ask for payments of any kind over the phone. If someone from the IRS needs to contact you (this is rare), they typically send physical mail prior to making that contact. If someone calls you claiming to be from the IRS, hang up and call the number listed on their official site to verify.
Expand Your Portfolio With Precious Metals
For many retirees, the shift from full-time work to not working at all is difficult to adjust to. Retirement is a big change, and leaving the office can create gaps in your life schedule, but that doesn’t mean you can’t have structure. Consider your needs, wants, and personal interests, then use them to build a routine that gives you purpose.
At American Hartford Gold, we help match clients with precious metals, like gold or silver, for their collections. Collecting could be a worthwhile hobby to explore — and a Gold IRA can be a great way to protect the value of your savings.
FAQs
Should I start Social Security as soon as I retire or wait?
It depends on your budget, health, and whether a spouse may need to rely on a survivor benefit. Starting earlier gives you more months at a temporarily lower amount that will increase once you reach full retirement age (FRA). Waiting increases the monthly payment.
What is the best way to plan for Medicare and other health costs?
Most people enroll in Medicare by age 65. It’s important to set aside the necessary funds ahead of retirement as healthcare premiums tend to rise more quickly with age. Waiting until retirement to plan for health costs is not recommended.
You should research the health plans you may want to enroll in during retirement while you’re still working. Stay up-to-date on their specifications and requirements to note any changes that may affect your desire to enroll in the future. Remember, healthcare plans have enrollment windows, and late enrollment can result in penalties.
What steps can I take to protect myself from scams now that I am retired?
Use strong passwords, and enable two-factor authentication wherever you can. Consider freezing your credit until you need to use it, and review your transaction history regularly. Delete strange emails or texts from unknown or unverifiable sources. If you get an urgent message about your account, do not click any links or contact any numbers provided.
Get your bank’s number from a verified source, like their official website, and call them directly. Do not give out your bank password(s) or other sensitive information, like a social security number, through email or over the phone. Please note that your bank will never call and ask for your password, and the IRS will never call and ask for payments over the phone.
Sources:
Required Minimum Distribution (RMD): Definition and Calculation | Investopedia
