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Financial Planning Advice for Retirees: 7 Tips for Living a Financially Healthy Life

A recent report found that 41% of Americans say “it’s going to take a miracle to retire.”

Whether you fall in this category or not, financial planning is critical. Even if you have more than enough money to retire comfortably, it’s still important that you practice savvy money planning.

If you don’t carry out comprehensive financial planning, your wealth could be eroded over time, eventually impacting your lifestyle and financial health in later years.

Unfortunately, a lot of financial planning advice for retirees focuses on lower-income brackets. If you are a high-net-worth individual, it can be hard to find practical money advice for seniors that’s relevant to your financial situation.

Continue reading for 7 pieces of advice around financial planning for seniors that focus on preserving wealth.

1. Create a Cashflow Plan

One of the pieces of money advice for seniors that applies to all income brackets is to create a cash flow plan. It doesn’t matter what your income is, it’s always wise to create a cash flow plan.

A comprehensive cash flow plan will list your sources of income and your forecasted expenses. This allows you to get a top-down view of your cash flow so that you can make better financial decisions throughout the year.

If you can predict the state of your cash flow, you can plan in additional expenses without harming your cash flow. If you don’t manage your cash flow wisely, you could end up overspending or overextending yourself in certain periods.

A lot of people try to keep their “cash flow” forecast in their minds. This can work if your finances are very simple, but in most cases creating a physical plan is more effective.

If you have a cash flow plan, you can also refer to this when carrying out tax planning with your financial advisor. If they advise you to trigger a specific deductible expense within a certain financial period, you can consult your cash flow plan to ensure that you will have enough liquidity to easily meet the expense.

2. Consider Increased Longevity

Reports show that life expectancies around the world are rising steadily. Between 2000 and 2019, the average life expectancy rose by more than six years.

Medical advancements aren’t showing any signs of slowing down. Over the duration of your retirement, your life expectancy could rise considerably.

In other words, you might live longer than you think, and you need to make sure that your income will comfortably sustain a long life.

3. Diversify Your Portfolio

If you are looking to maximize returns and strengthen your portfolio against market downturns, then you might want to look into diversifying.

Portfolio diversification helps protect you against sudden shifts in the market. If one investment goes down or performs poorly, it won’t heavily impact the performance of your total portfolio.

The best place to start when diversifying your portfolio is to look for asset classes with low or negative correlations. If one experiences a downtrend, another might counteract that.

For instance, fixed-interest investments such as treasury bills and CDs are investments that offer a low correlation to equities.

If you want to diversify your portfolio, a good start would be to consult a well-established RIA fiduciary financial firm. Be sure to research their disciplinary action history at Brokercheck. If they don’t offer tax planning services, you might also want to engage a tax planner.

Once you have come up with a diversification plan, make sure that it also ties into your tax planning goals.

4. Live Within Your Means

No matter where you are in life, or what your financial situation is, it’s always advisable to live within your means. However, if you are retired, living within your means is doubly important.

Even if you have a sizable income, it’s still important to focus on spending responsibly. Unless you are very disciplined around money, lifestyle creep can easily rear its head.

Before you know it, what you thought was a generous retirement income is now hardly seeing you through the year.

One of the best ways to avoid lifestyle creep is to create an intentional spending plan. Even if you have a fair amount of disposable income, it can be a good idea to evaluate which areas you want to spend on and where you can eradicate discretionary spends that don’t add value to your life.

5. Be Smart About Your Assets

Another area where you can maximize your wealth in retirement is savvy asset management. Not only should you evaluate your investments on a regular basis, but you should also evaluate your other assets to make them work for you.

For instance, you might have a yacht that you rarely use. Yachts belong to the sector of assets that don’t typically rise in value. Instead, they depreciate year on year and require extensive upkeep.

If the maintenance costs of a yacht outweigh the recreational value you get from it, you could consider selling this asset and investing the money.

Investing after retirement can be a great way to maximize and preserve your wealth. The goal is to have your wealth outlive you rather than you outlive your wealth.

6. Manage Your Risk

One of the key pieces of financial planning advice for retirees is to manage risk closely. The younger you are, the more risk you can typically handle in your portfolio.

Once you enter retirement, it becomes critical that you aren’t overly exposed to risk. High-risk investments are, by their nature, more likely to respond dramatically to market downturns.

7. Factor in Inflation

Our last piece of financial planning advice for retirement is to always factor generously for inflation.

Inflation can erode one’s income, reducing your spending power. If inflation levels rise unexpectedly, and you aren’t prepared, this could impact your lifestyle considerably.

Depending on world events, increased rates of inflation can hit relatively unexpectedly. For example, a few years ago, few people in the US were concerned about inflation. Fast-forward to today, and the world is facing a global inflation crisis, with the US laboring under the highest inflation rates it’s seen in 40 years.

One way you can safeguard your portfolio from inflation is by investing in assets that can act as an inflation hedge, such as gold, real estate, REITs, and commodities.

Are You in Need of Professional Financial Planning Advice?

Practicing savvy money management is important at any age, but especially if you are approaching or in retirement.

The financial planning advice in this guide will give you a good start, but it’s essential that you have a professional on your side who can give you tailored advice.

Are you looking for a reliable financial planner for retirees?

At Sara-Bay, we help our clients plan the financial future they deserve. Sara-Bay strives for complete transparency. You will always know where your money is invested and how it’s performing.

Contact us today to arrange a discovery call. After this, we will create a proposal to outline where we can add value to your situation.

Disclaimer: “Sara-Bay Financial Corp. is registered as an investment advisor with the SEC. All information contained herein is for informational purposes only and does not constitute a solicitation for investment advisory serves or an offer to buy or sell securities. Registration does not imply a certain level of skill or training. If you are interested in our services, please see our Disclosure Brochure (Part II of the form ADV); which provides detailed information about Sara-Bay Financial Corp. and inherent risks that may be associated with our advisory services.

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