I can’t count the number of articles that I have read outlining how to prepare for retirement. But what about once you reach retirement? I’m certain that we all hope to be living on the beach sipping a cool drink in the shade. But if the financial markets in the last few years have taught us anything then it is that the unexpected happens.
- Invest in income producing assets with an eye on capital preservation – During the accumulation and growth phase of life, the objective is to save money and make it grow. In retirement however, your objective is capital preservation and income. Therefore, you need to take the time to move the majority of your investments (stocks, mutual funds, bonds, real estate, commodities, currencies, etc) into assets or investments that are low risk (capital preservation) and pay out on a regular basis (income). Speak with a financial advisor to determine what the right mix is for you.
- Complete your estate planning – Estate planning is the process by which you create the necessary vehicles to transfer the maximum dollar amount from your estate (the stuff you own when you pass away) to whomever or whatever you designate. So for example, proper estate planning helps avoid probate (see Judicial Nightmare) and death taxes. Basically, you are making sure that what you want goes to who you want it to go to without facing costly and timely court procedures and taxes.
- Update your Last Will and Testament – Although, a Will is part of estate planning, I believe it merits its own bullet point. Different events in life will cause you to update your Will (a new baby for example). However, we tend to wait years in between updates, especially once we stop having kids. But with the addition of grandkids and potentially the consolidation of assets to prepare for retirement, your Will may be out of date or contain provisos that are now meaningless.
- Make sure your children know what to do in case of an emergency – So assuming you’ve gone to all of the hassle of moving around investments, using a tax attorney to do your estate planning, updated your Will, and then something happens, will your children know what to do? Do they have any idea where the Will is or what your wishes are in the event you need resuscitation? Certified Wellness Counselor Karen O’Neil has actually put together a workbook outlining everything you should do so that nothing goes unforgotten. You can read more about her and A Guide to Getting Affairs in Order at her website.
- Protect against identity theft and scams – Unfortunately, retirees and senior citizens are often targets of identity theft and scams. Use the same cautionary sensibility that got you where you are to guard against deviants. Also, strongly consider using credit monitoring to protect yourself. Several years ago, a laptop containing the private information of thousands of war veterans was stolen. That information was used to steal many of the identities. So invest the $10 a month to gain peace of mind.
As I mentioned above, retirement is about fulfilling your dreams, spending time with family, and generally just doing what you want. So make sure to take the necessary steps so that your retirement isn’t interrupted by costly mistakes.