If you belong to the average modern-day retiree, you must be wealthier and healthier than your parents were. But these days there are more “temptations” that could make you lose your hard-earned retirement funds if you are not careful.
This article will help you avoid that, This will help you manage your retirement fund so you can enjoy it as long as you live.
Though these tips are laced with my firsthand account as a needy elderly, its bits of practical wisdom are taken from the archives of the FDIC (Federal Deposit Insurance Corporation).
- 1 1. Get financial advice if you need one
- 2 2. Prepare for any eventuality
- 3 3. Develop a spending plan
- 4 4. Control your emails and phone calls from marketers
- 5 5. Review and monitor your credits reports
- 6 6. Don’t accept an offer for an advance (loan) a portion of your future pension
- 7 7. Limit the use of your credit card
- 8 8. Do not avail of reverse mortgages
- 9 9. Monetize a Hobby
- 10 10. Buy an annuity only after knowing everything about it
- 11 11. Go for discounts and other deals
- 12 12. Consider going electronic
- 13 13. Simplify your money management activities
- 14 14. Organize and protect your documents
1. Get financial advice if you need one
If financial planning is alien to you, get professional help. But don’t immediately jump into the first slick-looking, fast-talking, laptop-totting dude you come across. (Silly me, I lost a third of my retirement check that way).
The fields of expertise of these advisors vary a lot depending on their training, standards and applicable oversight regulatory laws. Be sure you have engaged the right expert.
Check on their track record, their clients and their fees. You might be spending more than you gain from their services.
The Financial Regulatory Authority gives tips in choosing the right financial advisor.
2. Prepare for any eventuality
This doesn’t mean getting hit by a truck or the roof falling over your head – though anything is possible.
Specifically, this means that in the event you become unable to attend to your finances, the records of your financial institutions and account numbers are available to your loved ones to attend to your needs.
Consult your lawyer if a “special power of attorney’ is necessary so that you can designate a person to exercise decisions over your financial or personal affairs if and when the time comes.
Note: There are two kinds of POSs (special power of attorney): the “durable” POA which takes effect upon signing and remains effective until you become incapacitated and the “springing” POA which becomes effective only if you are legally incapacitated.
Let your lawyer give you the pros and cons of each so that you can make a good decision.
3. Develop a spending plan
It’s kind of like, “What are you going to do if you have very limited money?”
Look at areas where you can cut costs, i.e., commute rather than drive, minimize dining out, go for discount stores, look for generic drugs, your car insurance, cable TV subscription, turning off unnecessary lights, and many more.
Make a monthly budget and stick to it.
4. Control your emails and phone calls from marketers
Marketers, phone or email, are slick. They can sell their mothers -in-law if they need to.
Limit your exposure or engagement with them to avoid buying something you really don’t need, or shoddy products and services from vendors who don’t stand behind their claims.
Review the privacy disclosures of banks and financial institutions you do business with to make sure they don’t share information with other banks or institutions.
In general, just keep away from people who suddenly approach you with stories that they specialize in helping seniors with their home improvements, health needs and financial products that you don’t need.
The Federal Trade Commission has a comprehensive guide in stopping unwanted mails and phone calls.
5. Review and monitor your credits reports
Even if you are not applying a loan, it is best to know your credit standing. Any error in the reports will make it difficult for you to buy insurance, or your credit card company may charge you higher rates on purchases because you are considered a credit risk.
It is also a good way to pre-empt identity theft.
6. Don’t accept an offer for an advance (loan) a portion of your future pension
In an apparent gesture of altruism (especially if you are badly in need of cash), some lending institutions may offer you a loan charged to your future pension, social security or other retirement receivables. Beneath this apparent good intention lie stiff charges and interest rates that will hook you forever in debt.
If you need cash real quick, consult with your banks or financial institutions for short temr loans and compare their rates with those of lenders.
7. Limit the use of your credit card
I nearly lost my wits from credit card collectors who called me morning, noon and nighttime, 7/7.
If you must use it, pay the balance in full. You will be burdened with stiff interest rates if you accumulate them. Even small purchases, if accumulated, will add to your financial burden.
8. Do not avail of reverse mortgages
Reverse mortgages are special type of home loans for elderly home owners (62 yrs or older), against the equity of their homes without monthly payments provided they meet the terms of the loan agreement like regularly paying their property taxes.
However the loan is still to be paid, plus interest, when you or your spouse sells the house.
If you draw out a reverse mortgage and you and your spouse live in that house, experts suggest, that you both sign the mortgage agreement to ensure that the surviving spouse shall continue to live in that house should the other die.
9. Monetize a Hobby
Monetizing a hobby is an excellent way to supplement your retirement income, not to mention it keeps you busy, and healthy.
No hobby? Then develop one. You have nothing to lose but lots to gain. It will keep your brain constantly challenged, keeps boredom and loneliness away.
Forbes has several tips on how you can make money from a hobby.
10. Buy an annuity only after knowing everything about it
An annuity is a contract between you and a provider, usually an insurance company, bank or other financial institutions, wherein you make a lump sum payment or a series of monthly payments, in exchange for future regular disbursements at the maturity of the agreement.
That’s the easy part. The hard part is that there are several types of annuities with each having their own mix of risks and benefits.
Consult an expert before committing a portion of your retirement fund to an annuity. You might end up in the losing side of it.
11. Go for discounts and other deals
Some banks offer some perks to senior clients like discounts on some bank products and services.
Better still, shop around for other banks who give better deals to seniors or better rates from other types of bank accounts.
12. Consider going electronic
These days bills payment, fund transfers, and many other transactions done over the counter many years back have become electronic. .
Of course, this needs a little computer literacy and a good anti-virus software to protect your electronic files from hackers. And your system could be hit by a virus or you become a victim of identity theft.
Still the benefits of saving time and transportation expenses far outweigh the potential risks.
13. Simplify your money management activities
If you’ve acquired multiply bank deposits, investment accounts and credit cards through the years, consider giving up some to reduce the number of accounts to manage.
If you have receivables from your pension fund or tax refunds, have them directly deposited to a low or no-cost checking or savings account.
You many also arrange automatic withdrawals from your other investments and have them directly deposited to a savings account.
These will reduce your administrative costs, time and effort, of your financial resources.
14. Organize and protect your documents
Organize and protect your documents, i.e., bank accounts, insurance policies, social security, company pension records and other personal and financial papers so your family can easily retrieve them in case you are unable to do so.
Keep them safe and secure from a house cleaner or caregiver who may regularly come in for a visit.
Consider having a safety deposit box for these documents to protect them against theft, and damage from fire or water.
Should you use one, however, make sure a trusted member of the family or your lawyer knows the combination so they can retrieve these should you be incapable to do it yourself.
Put them inside evacuation bags to protect them damage, either natural, or man-made.
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