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Eleven ways to save after retirement
self help article
by Dana Dratch

Prosperity and financial wellbeing self help article:

Want to hang on to your gold in your golden years?

Take the same approach to money management you did before you grabbed the proverbial gold watch and kissed the 9-to-5 grind goodbye.

Careful planning, money management and saving will go a long way toward making your retirement years relaxing — not taxing.

Here are some tips for making the most of your money after retirement:

1. Draft a financial plan.

“The great fear is running out of money,” says Chris Farrell, host of the nationally-syndicated television show “Right on the Money!” and author of Right on the Money: Taking Control of Your Savings.

“That’s the paralyzing fear every retiree has.” Creating a financial game plan will help you manage your fears, as well as your money.

Determine where your money will be coming from — investments, pensions, Social Security or savings.

“You want to keep your money in [tax] deferred vehicles as long as possible,” says Wayne G. Bogosian, co-author of The Complete Idiot’s Guide to 401(k) Plans. “Tap the ones that aren’t — like Social Security, traditional pensions and personal savings.”

Figure out what you need coming in each year to live the way you’d like, and allocate your money accordingly. Typical strategies are to keep a certain percentage of your savings in cash or CDs (liquid), a certain amount in bonds (mid-term payoff) and the rest in stocks (long-term investments.)

self help resources listed for your convenient self help search in the self help subjects of Prosperity, financial management, self help budgets, save money, start a small business, self help career development, self help strategies for increasing your prosperity.
size=1> Set a budget.

“Look at what you want to do” Farrell says. “In the early years of retirement, be a little on the cautious side, but don’t deny yourself.”

Review your finances, at least annually. “See where you are and what you want to do,” Farrell says. “Spend in such a way that you are enjoying your life.” Keep a little something tucked away, “but you never come back, so you might as well enjoy it.”

When it comes to retirement savings accounts — IRAs and 401(k)s — taking out 4 percent a year is a standard yardstick.

“If you only spend 4 percent of what you’ve got, it’s virtually impossible to run out,” says Clark Howard, host of a nationally-syndicated consumer radio show and co-author of Get Clark Smart: The Ultimate Guide for the Savvy Consumer.

But be flexible enough to look at your special circumstances and goals. Remember, if you deplete your investments early on — even if you work part-time and continue investing — it will be tougher to make up the difference.

Best bet: sit down with a financial planner who specializes in retirement distribution analysis.

Make sure your expert makes money only from offering advice — not from commissions on products sold to you or through transaction fees every time something is bought or sold.

2. Rent before you buy.

Looking to try out a new lifestyle, such as living out of an RV or moving to a fishing cabin in the north woods? Try it before you buy it.

“Sure you enjoyed your vacation in the RV, but do you really want to live in it?” says Farrell.

Instead, negotiate to try it out for six months, and see how it wears on you. “You’re not sinking your hard-earned savings into a new lifestyle,” says Farrell. “You’re leaving your options open.”

3. Eliminate extra fees and charges.

This is a good time to slowly look over the fine print on your finances. Is your bank charging outrageous service fees?

Shop other banks or credit unions that are willing to offer you the same options for free. self help resources listed for your convenient self help search in the self help subjects of Prosperity, financial management, self help budgets, save money, start a small business, self help career development, self help strategies for increasing your prosperity.
size=1> 4. Work part-time.

If you enjoy your job, or the job you’re considering, this is a great move. Any money you’re earning isn’t coming out of your 401(k), which means you’re actually saving cash for later.

But run the numbers before you go back to work. And if you don’t do your own taxes every year — this might be a good time to hire a pro to tally it up for you, according to Farrell.

If you start collecting Social Security between 62 and your “year of normal retirement” — a benchmark set by the Social Security Administration that varies with your birth year — watch your income.

If your job paid you more than $11,520 in 2003, you could lose a sizable chunk of your Social Security benefits. (One dollar for every $2 you bring in over $11,520.) For 2004, the amount increases to $11,640.

Either keep your earnings below that threshold or defer Social Security until later in retirement, when you cut back on your earned income.

And don’t forget to weigh the intangibles. If work is drudgery, that’s one thing, but if you crave interaction with other people and want to keep your professional skills sharp, it may be worth a little extra in taxes.

5. Claim that senior discount.

“Use every discount you can, including that AARP membership,” Farrell says. He has one family friend who took this technique a step further — much to his financial benefit.

Newly-retired, the man went to the independent businesses he’d patronized for decades, announced he was now retired and asked the owners what kind of a discount deal they could offer.

“It’s no different than the deals he [negotiated] for years in his working life,” Farrell says.

Too often, he adds, retirees don’t look at it that way. They need to realize that they are a very valuable commodity, especially for independent businesses. They tend to be extremely loyal, have disposable income and visit frequently.

In return for regular patronage, some gas stations, diners, dry cleaners and the like are willing to offer them perks to keep their business, according to Farrell. self help resources listed for your convenient self help search in the self help subjects of Prosperity, financial management, self help budgets, save money, start a small business, self help career development, self help strategies for increasing your prosperity.
size=1> 6. Shop your money.

A typical safe haven for ready cash — bank CDs — won’t give you much of a return on your investment. So shop around.

“Sometimes little-known institutions pay a much higher rate,” Howard says. You can search online using Bankrate.com’s Highest Yield search to get an idea of who’s offering the best deals.

7. Be on the lookout for frauds.

Unfortunately, con artists target retirees. Keep active, stay social and be wary of anything that sounds too good to be true. It probably is.

8. Re-evaluate your life insurance needs.

Typically, you buy life insurance to replace income that your family would have to do without if you or your spouse died. But if you’re not drawing income, do you still need life insurance?

Sit down and crunch the numbers. If you’re working part-time, would your spouse’s lifestyle suffer if that income disappeared? Or if your Social Security or pension was reduced or eliminated?

Is your estate large enough that your family would be left with a tax burden when you died? Would your spouse or family have trouble coming up with the money to cover funeral expenses?

If so, you may still need a policy. If not, and especially if you and your spouse are living off investment money that would continue coming in, life insurance may be an extra you no longer need.

9. Keep putting money in your company’s retirement plan.

Working part-time in your golden years? Sock some of your paycheck into a 401(k) or IRA.

Because employers want to attract retirees, “more and more employers are not requiring you to work full-time to be eligible for 401(k) benefits,” Bogosian says.

Not only are you saving extra money for your golden years, but also you’re reducing your taxable income. self help resources listed for your convenient self help search in the self help subjects of Prosperity, financial management, self help budgets, save money, start a small business, self help career development, self help strategies for increasing your prosperity.
size=1> 10. Plan tax-efficient investing.

Look for investments that will give you steady growth with a minimum of taxable income. For example, “because of the tax implications, it’s [often] better to have your bonds inside your 401(k) or IRA and your stocks outside,” Howard says.

And never make assumptions about the tax consequences of your investments — read the fine print.

“Don’t just assume that all mutual funds are tax efficient,” Bogosian says.

11. Evaluate long-term-care insurance.

Even the experts are divided on this one. Some claim that in an age of unlimited medical advances and limited time and funds, it’s a necessity.

Others contend that retirees are better off banking the money they’d spend in premiums and making their own plans.

“Unfortunately, most people do nothing,” Bogosian says.

Do something. Force yourself to weigh the options.

Does it seem likely, given your medical and family history, that you might need long-term care?

Do you have family who could manage to take you in and take care of you if anything happened? (And before you automatically say “yes,” be sure to talk it over with them.)

Do some checking, and find out what a policy would cost and what it would cover.

Then you can take action and make a choice that’s comfortable for you.

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Dana Dratch. Visit Bankrate.com for more financial and retirement planning resources, including live calculators. **Dana Dratch is a freelance writer based in Atlanta.

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The contents are solely the opinion of the author and should not be considered as a form of therapy, advice, direction and/or diagnosis or treatment of any kind: medical, spiritual, mental or other. If expert advice or counseling is needed, services of a competent professional should be sought. The author and the Publisher assume no responsibility or liability and specifically disclaim any warranty, express or implied for any products or services mentioned, or any techniques or practices described. The purchaser or reader of this publication assumes responsibility for the use of these materials and information. Neither the author nor the Publisher assumes any responsibility or liability whatsoever on the behalf of any purchaser or reader of these materials.

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self help resources listed for your convenient self help search in the self help subjects of Prosperity, financial management, self help budgets, save money, start a small business, self help career development, self help strategies for increasing your prosperity.
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