7 Steps to Help Simplify Finances in Retirement

Created in Collaboration with Kiplinger.

Retirement is a time to pursue long-held dreams. And just as downsizing to a smaller property with less upkeep can free up valuable time, so can making a plan to streamline finances as you enter this new phase of life.

Bringing order to the many elements of your financial situation may mean consolidating investment accounts, putting regular household payments on autopilot, culling extra expenses, and more. Bonus: As you take a closer look at your finances, you’ll likely find ways to save money.

Simplifying your financial life with a formal plan may also help pre-retirees feel more confident about the future, according to a study conducted by LIMRA.¹

To help get organized, review these seven steps.

Work with a financial professional to help streamline the number of retirement accounts you hold. It’s not uncommon to accumulate several accounts over the years, including 401(k)s and traditional and Roth IRAs. On average, for example, younger Baby Boomers change jobs 12 times during their careers², making it easy to accrue a number of employer-based retirement accounts.

A financial professional can help you evaluate your options, including rolling over assets into another qualified plan or discussing whether converting a portion of the assets into guaranteed income makes sense for your situation.

Overall, reducing the number of accounts you manage can:

• Simplify tracking savings and investments
• Help you gain a clearer picture of asset allocation
• Make it easier to calculate required minimum distributions
• Limit the cost of maintenance fees.

Take a close look at monthly expenses to weed out recurring costs like apps, subscriptions, professional memberships, and commuting passes that are no longer useful to you. You may also find that you can pare down certain household fees as well – such as a telephone landline or dry-cleaning.

As life changes in retirement, insurance needs may shift, too. For instance, you may no longer need short- or long-term disability insurance. And if you’re putting fewer miles on your car, you may also be eligible for lower car insurance premiums. But you may want to consider adding new insurances, such as a hybrid life insurance and long-term care product that can help provide some financial protection for you and your loved ones in two important ways.

The more debt you can erase as you approach retirement, the better. Eliminating credit card debt, car payments, and other loans gives you added flexibility for things like travel, contributing to a grandchild’s college costs, or protecting against any unexpected costs that arise.

Sources: "Debt of the Elderly and Near Elderly," Employee Benefit Research Institute, March 2018; Survey of Consumer Finances Chartbook, The Federal Reserve, 2017. *Other debt may include home improvement or medical debt, non-HELOC lines of credit, loans against retirement accounts or insurance policies, among other forms.

Many bills can be paid online with an auto-pay feature that saves you from sitting down each month with your checkbook or clicking through several screens to submit your payments online. Consider setting up automatic payments so that even if you are traveling or your health is compromised, you won’t have to think about paying your mortgage or having the electricity shut off due to late payments.

Help prepare for the future by updating your legacy and estate plan. Consider establishing a power of attorney and healthcare directive, in case you fall ill and are unable to pay bills or make decisions about care. Also, consider putting a will and trust in place, which will in place, which will make it simpler for loved ones to deal with the administrative tasks of settling your estate. It also helps ensure your wishes will be carried out.

Check retirement savings accounts and cash accounts to ensure that your beneficiary designations are up to date. Taking this measure will help your assets avoid probate, saving heirs from additional estate-settlement delays and costs.

As you organize your finances, work with your financial professional to help target, coordinate, and customize the best solutions for you. Just as downsizing and decluttering your home can provide a fresh outlook, streamlining your financial life can make a big difference to your overall sense of wellbeing in retirement. And that can ensure more time to spend doing what you love in retirement.