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How to Simplify Your Financial Life Before Retirement

We spend a significant portion of our lives preparing for retirement, but when the time comes to leave our careers, our life after work isn’t necessarily carefree. For example, it’s been reported that about 70% of Baby Boomers—many of whom have already retired or are close to it—wish they had saved more and started saving earlier.1

Still, simplifying your financial life can make the transition to retirement less stressful. Before you prepare for your retirement party, consider the different ways you can be proactive about making your life a bit easier. By planning now, you can reduce the stress and headaches you might encounter, as well as give yourself more time to enjoy your retirement instead of constantly playing catch-up.

Consolidate Your Accounts

Over their working years, many people end up with numerous banking and investment accounts. Consolidating accounts will leave you with fewer usernames and passwords to remember and fewer statements to organize every month.

Selecting one institution to hold all your assets makes it easier for you to keep track of your resources. In practice, this is often one brokerage, one bank, and one credit card issuer.

Sometimes people benefit by having a few accounts dedicated to saving for different purposes (such as emergencies, vacations, and deferred spending). But, if you don’t have a specific system in place already, consider keeping just one checking account and one savings account.

While you’re at it, select one major credit card. All other things being equal, choose the card you’ve had the longest. (Don’t cancel the other credit accounts—that can harm your credit score—just don’t carry those cards with you.)

For those who work with multiple financial professionals, consider finding one person who can manage everything for you, and coordinate different aspects of your financial life. You don’t want your investment advisor to re-balance your portfolio only to tell you that the tax consequences are the accountant’s problem. There are many financial advisors who will help develop a spending plan, advise on investments and insurance, guide you through the analysis of your retirement sustainability, and even prepare your taxes.

Taking these steps can help you keep everything under control as you transition to retirement.

Go Paperless and Automatic 

Almost all the companies sending you paper statements now allow you to use paperless statements instead. By not having to organize and shred paper regularly, you’ll free up more time to enjoy other things in your retirement, like spending time with your family, pursuing a new passion, and working on long-dormant home projects. Less clutter will naturally make you feel more organized and in control of your financial future moving forward.

You’ll still be able to easily access all your statements on-line, and you can always download (or even print out) any statement you may need. You’ll also get a notification every month once your payment is due and your statement is ready. Just be aware that some institutions keep your statements on-line for only a limited period of time (like 18 months).

Beyond that, many credit card issuers also allow you to set up automatic payments, either for the minimum due or the full monthly balance (or anything in between). Taking advantage of these services will prevent you from worrying about missing a monthly payment and eliminate the need to track lots of paper.

Recurring expenses: Focus on What You Value

From insurance policies to magazine subscriptions, there are many monthly expenses you might reconsider in case they no longer add much value to your everyday life. Revisit the insurance policies you’ve had for years and see if they are helpful for your evolving needs. For example, you may need less life insurance in retirement, but more protection against the expenses of long-term care.

When it comes to subscription services, it can be easy to lose track of what you’re paying for each month. Eliminating those you no longer value will not only reduce the number of bills you have to keep track of, but will allow you to put aside more money for other things you may value more: a longer vacation, a nicer update to the kitchen, or a larger contribution to a charity that’s important to you.

Small Steps Lead to Less Stress

Ken and Britta believe in the fundamental principle of focusing on the things you can control. Of course, there’s a lot that influences our retirement that’s not up to us. (What will the stock market do? How much interest will the bank pay me? How much will those season tickets cost me?) Yes, there can be a lot to consider, but before you go into panic mode, take a step back, breathe, and focus your attention on one item at a time so you don’t get overwhelmed before you even start.

Retirement can be a beautiful thing, and we all deserve to enjoy the fruits of our labor. There are always more ways to increase your personal fulfillment past your working years. Do some research online, chat with your friends, and do your best to eliminate any bad habits before beginning your retirement years. Simplifying your financial life before retiring can be a good starting point.

1. https://www.myirionline.org/docs/default-source/research/boomer-expectations-for-retirement-2016.pdf

This content is developed from sources believed to be providing accurate information and is provided at least in part by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security. Original content of Practical Financial Planning, Inc. only is copyright © 2020 by Practical Financial Planning, Inc.