Money management tips for retirees

What constitutes a perfect retirement is different for everyone. Some people may imagine spending their golden years fishing their days away, while others may aspire to finally embrace their inner globetrotter. Though individuals’ retirement dreams differ, every retiree will need money, which only underscores the importance of a wise and disciplined approach to money management.

Average life expectancies have risen considerably over the last several deca des. According to estimates from the United Nations Population Division, the average life expectancy in Canada for both sexes is just under 83 years, while it’s slightly more than 79 in the United States. Those figures are a welcome sign, but they may inspire a little fear among seniors who are concerned that they might outlive their money. No one knows how long they will live, but everyone can embrace a handful of money management strategies to increase the chances that they wo n’t feel a financial pinch in retirement.

• Study up on the tax implications of withdrawing from your retirement accounts.

Every retirement investment vehicle, whether it’s an IRA or a 401(k), has tax implications. Money withdrawn too early may incur tax penalties, and even money withdrawn long past retirement age could elevate retirees into a new tax bracket that could prove costly. A financial advisor can help retirees determine the tax implications of withdrawing money from their retirement accounts and may even develop a detailed guideline of when withdrawals should be made and how much should be withdrawn in a given year in order to minimize tax liabilities.

• Prioritize your own needs.

Though retirees, particularly those with children and grandchildren, may feel an obligation to help their families in difficult financial times, generosity can be very costly for adults who have stopped working. Retirees may or may not have opportunities to generate new income, and even those who do likely won’t make enough to meet their daily financial needs. Given that reality, retirees must prioritize their own financial needs, including their immediate needs and those they will have for the rest of their lives. Though it might be difficult to turn down loved ones’ requests for financial help, retirees must make sure they can pay their bills and maintain a quality of life that won’t jeopardize their long-term health.

• Examine your housing situation.

Equity in a home is a feather in the cap of many retirees. Retirees who own their homes and live in locations with high property taxes might be able to cash in on their equity by selling their homes and downsizing to a smaller home with lower property taxes. If moving is not a consideration, discuss a reverse mortgage with a financial advisor. A trusted financial advisor can highlight the advantages and disadvantages of reverse mortgages, which are a grea t option for some people to improve their financial well-being in retirement. • Stick to a budget during retirement. The U.S. Department of Health and Human Services reports that roughly 70 percent of individuals who turn 65 will need long-term care in their lifetimes. That’s just one expense retirees must budget for, and it’s more sizable than some people may recognize. In fact, the Fidelity Retiree Health Care Cost Estimate found that the average retired couple age 65 in 20 22 will need roughly $315,000 to cover health care expenses in retirement. And health care costs are just one of many expenses retirees can expect to have. Budgeting and avoiding overspending can ensure retirees have the money they need when they need it. No one wants to outlive their money in retirement. Various strategies can help retirees effectively manage their money so they can enjoy their golden years without having to worry about their finances.

Data from the Centers for Disease Control and Prevention indicates that as much as 5 percent of older adults living in the general community are suffering from clinical depression. Those figures are even higher among older adults who are hospitalized (11.5 percent) and those who require home health care (13.5 percent). The National Council on Aging reports that older adults are at an elevated risk of developing depression, though there’s no single, specific cause increasing that risk. Chronic conditions, which the CDC estimates affect as much as 80 percent of older adults; decreased functional ability; reduced mobility; loneliness; and financial issues related to retirement are among the potential causes of depression in older adults. As difficult as depression can be, the NCOA notes that treatment has been found to be just as effective for seniors as it is in younger populations. Aging individuals or those concerned about an aging relative are encouraged to visit the American Psychological Association website at psychiatry.org to learn more about the many ways depression can be treated.