10 Tips for Retirees in These Difficult Times

001 - Couple meeting with AdvisorThe recent economic changes impact everyone and particularly those who are retired. Whether it is a drop in value of your retirement account or decrease in interest rates at the banks, everyone has noticed.

The question is what can retirees do now? Some things are fairly obvious, such as delaying a vacation or just spending less on trips.  Putting off major purchases as long as you can is helpful.  But for more subtle hints a professional opinion is useful.

Here are 10 things retirees can do in these difficult economic times.

1.     Shop your insurance program. There can be large differences in premiums from one company to the next and it is wise to re-shop your insurance package (home and car, etc.) with several companies every few years.  The savings are often in the hundreds of dollars.

2.     Do not take retirement plan distribution if you do not need them. A new  law allows retirees to avoid taking a minimum distribution from certain retirement plans. The concept is to allow the values of the account to come back up and then resume distributions.

3.     Get professional advice based on you and your situation. If you are unsure as to what areas where you could benefit from financial planning go to http://www.chamberlainfp.com/pdf/fp_security_survey_retire.pdf and complete the Financial Security Survey. It’s free and will be revealing.

4.     Saving a dollar is easier than making one. Keep track of it on a monthly basis. You can do this with pencil and paper, computer programs such as Quicken® or Excel and there are several online versions such as www.mint.com.  This is an easy way to help identify those areas you might be able to cut back on without impacting the quality of your life.

5.     Beware of “its too good to be true”.  Clients frequently call asking about an invitation for a “free lunch” to learn about an “investment that can never go down”, “earn extra money from your home” “Long term care without paying for it” etc. Remember there is often fine print or a hook.  If you don’t understand it, avoid it or it least get a professional second opinion

6.     Understand your investments costs. When you’re making a high amount of interest and the stock market’s going gangbusters, overpaying on fees may not seem too important.  But in this environment, where every ½% counts it’s crucial that you have a firm understanding of all the fees (commissions, sales loads, deferred charges, redemption fees, exchange fees, surrender fees, account fees, management fees, distribution fees, account charges, and even statement fees).  Depending upon the size of your portfolio this could save you thousands of dollars a year.

7.     Do not let salesmen take advantage caused by the recent economic havoc. An 83-year-old client was recently sold an annuity at her bank where she cannot get all her money back until she’s 93, which is totally inappropriate.

8.     Having the proper asset allocation in your portfolio is dependent upon your risk tolerance (a mental state), your risk capacity (your financial state) and your goals, which includes your timeframe. The people that felt the most pain with the recent drop in the market had the incorrect asset allocation.  Now is a good time to make sure your asset allocation is correct.

9.     Reevaluate your Medicare part D program every November 15th.  For some of my clients this has saved them over $1000 a year.   Never assume that the program you currently have will be best for you in the coming year.  Each program changes every year as far as deductibles, copayments, preferred drugs as well as changes in the drugs that you take.

10. Know your options as to where you can seek financial advice.  You have three choices:

a.     Free information in publications, in the news or on the Internet as well as from friends or family.  None of these sources are specific to your circumstances or come from inexperienced individuals.

b.     Bank representatives, insurance salesman, and stockbrokers provide advice but are dependent upon selling you product to generate commissions. Whenever commissions are involved, conflicts of interest exist between what’s best for the client and the salesmen.

c.      Registered Investment Advisors are required by the government to always keep the client’s interest first and disclose conflicts of interest and their compensation. According to numerous publications and financial writers, using a fee-only planner is the best way to get objective advice that is not influenced by the conflict of interest that takes place in a sale situation.

While these 10 tips will not undo the effects of the changes in the economy, they may well help.

About the author

Michael Chamberlain, CFP®

Hello. My name is Michael Chamberlain CFP®, the principal of Chamberlain Financial Planning and Wealth Management. Our firm is “fee-only” with offices in Sacramento, Campbell and Santa Cruz California. “Serving clients from the mountains to the sea.”

Our mission is to help clients realize their full potential today while planning for an abundant tomorrow through comprehensive financial planning and collaborative decision-making.

As an experienced investment and planning professional, I have had the privilege of being interviewed by and contributing to hundreds of articles in such publications as Money Magazine, Financial Planning Magazine, ABC.com, Forbes.com, Nerdwallet, NASDAQ.com, Yahoo Finance and more.

I hope that you spend some time at the FiGuide site and learn more about the financial matters important to you. To learn more about our firm, visit our website www.chamberlainfp.com or give us a call at 800-347-1340.

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