10 keys to maintaining financial independence after retirement

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Whether you are already retired or are planning to retire in the near future, you’re preparing for a new phase of your life. You’ve worked hard and made many important decisions. Continuing to make informed, prudent decisions will keep you on your path of financial independence. Here are my 10 tips to help make your retirement enjoyable and rewarding.

1. Start with a plan

You need to understand the short- and long-term impact of financial decisions you make. According to a study by Fidelity Investments, 57 percent of current retirees look back on the years before retirement and wish they had done more to prepare. Learn from those who came before you. Knowing you’ll have sufficient income to sustain your desired lifestyle throughout your retirement years is key to an enjoyable retirement. And that starts with a plan.

2. Retire debt-free, or as close as possible

There is a sense of comfort when you live within your means and don’t have to worry about how the bills will be paid month by month. Use credit cards to take advantage of rewards programs and incentives; just be sure to only charge what you can afford to pay off each month.

3. Match expenses with sources of income

Understand your monthly income needs: the fixed (food, mortgage/rent, taxes, health care) and the discretionary (dining out, entertainment, travel, charitable giving). Ideally, you should plan to have your fixed needs covered each month by guaranteed sources of income. Once you know your fixed needs, subtract out any pension and Social Security benefits. If you have a shortfall in income to cover your fixed needs, consider taking a portion of your saved assets to purchase a guaranteed income annuity to fill the gap. This will help minimize your dependence on investment performance during retirement. Instead, you can use potential investment growth and income to support your discretionary needs, which may give you more flexibility.

4. Do not file for Social Security early — consider delaying beyond full retirement age.

According to the Social Security Administration, nearly seven out of 10 retirees filing for Social Security today are filing for their benefits early — meaning before their full retirement age (FRA).* By doing so, these retirees are locking in reduced benefits for the rest of their lives, sometimes reduced by as much as 25 percent. However, if you delay your benefits beyond your FRA, your benefit will increase by 8 percent per year between the ages of 66-70, or a total of 32 percent during those four years. If you file at 62, your benefits will be 76-percent less than if you filed at 70. Statistics show that, for partners who reach the age of 65, there is a 50-percent chance that one will live to 92, and a 25-percent chance one will live to 97. A single person age 65 today can expect to live on average an additional 22 years.* Unless you have known health concerns, you’ll likely be around longer than you think … so plan accordingly.

5. Manage health-care costs in retirement

For many of us, Medicare will be our health-insurance coverage, unless you’re fortunate enough to have employer-provided retiree health benefits. My advice: Do your homework. Meet with a few experienced Medicare supplement providers. They can help you evaluate the different programs available and help you make a decision based on your medical needs and medications.

6. Be aware of your risks

Remember that we live in a litigious world, so it’s important that you continue to protect yourself. Maintain the appropriate insurance coverages for your car, home/apartment, rental properties, etc. Keep coverage at or near the maximum limits allowed by each policy. Also, begin planning now for what would happen if someday you require long-term health care, either in the home or in a facility. These costs are typically not covered by Medicare. Understand the potential cost of care and discuss with your advisor what options are available.

7. Plan for getting older — proactively

As we age, we need to make many choices. And it’s always better to make choices in a proactive, meaningful way rather than having decisions forced upon us by sudden, unexpected events. Will your current residence be suitable throughout your retirement years? What types of social activities will be appropriate as you age? If your mobility decreases, how will you transport yourself to visit friends, family and/or health-care providers? Have these conversations with yourself and those around you well in advance and begin planning accordingly.

8. Have your documents in order

We should all have certain legal documents in place and have them reviewed at least every five years. Those documents include a will, powers of attorney — both health care and financial — and an advanced directive or living will.

9. Protect your identity

According to IBM, more than 1-billion records containing personally identifiable information were leaked in 2014 alone. Some tips to protect yourself: First, never click on a link in an email before verifying it with the person who sent the email — even if it comes from someone you know. A simple click can give identity thieves access to your computer and other information. Next, be sure to review your credit report at least annually. You can request a free annual credit report online at www.annualcreditreport.com or by contacting one of the three credit-reporting agencies directly. And lastly, if you want to be extra safe, add Fraud Alerts to your credit report. This will make opening new accounts for credit much more difficult for credit thieves.

10. Continue to challenge yourself and have FUN!

Retirement should be about having fun. Continue to be active, volunteer, give back and challenge yourself. According to the National Center for Health Statistics, people who stay busy after retirement live longer and feel a lot better. Seek out activities that are meaningful to you. And most importantly, have fun … you’ve earned it.