As Baby Boomers enter retirement, many are well on their way to a comfortable life thanks to years of saving and investing. But even the most savvy money managers must stay abreast of new financial technologies, trends, and laws that can affect their nest egg.
Here are seven money skills Baby Boomers should continue brushing up on to ensure their retirement funds last.
Using Technology to Help With Your Finances
In the age of automation and fintech, understanding how to use financial technology to your advantage is essential. Online banking, budgeting tools, and investment platforms can help you manage money quickly, securely, and efficiently.
Many sites also offer free calculators or retirement planners so you can quickly understand where you stand financially and make projections for the future. If you’re unsure how to use these tools, talk to your financial advisor or a trusted family member.
Budgeting for New Expenses
Retirement often brings a lot of new expenses, and budgeting for them can be tricky. Not only are you no longer making money, but you may also be spending more on medical care, travel, entertainment, and home repairs.
Crafting a budget that factors in these expenses ensures you stick to your financial goals and don’t run out of money. Also, allocate funds to an emergency savings account and consider purchasing long-term care insurance to prepare you for anything.
Learning About the Right Social Security Strategy
Social Security is a major income source for many retirees, but the system can be complex. Learning to maximize your Social Security benefits helps you get the most out of one of your largest retirement assets.
Seek counsel from a financial expert or read up on strategies for claiming Social Security benefits at different ages. For example, if you delay receiving Social Security benefits until age 70, you may receive higher monthly payments than those who claim earlier.
Inflation is the gradual price increase over time, which can erode your purchasing power. It’s essential to stay on top of inflation for two reasons: it affects how much money you need to save and how much you should adjust your budget each year.
The Consumer Price Index (CPI) measures inflation, so pay attention to this number available from the Bureau of Labor Statistics. Also, consider inflation when investing your money; real estate and stock investments tend to keep up with inflation better than savings accounts or bonds.
Diversification is an integral part of managing your retirement funds, as it helps protect you from sudden losses and unpleasant surprises. A diverse portfolio of stocks, bonds, mutual funds, real estate, cash investments, and other assets ensures that the rest can pick up the slack if one area takes a hit.
Your financial advisor can help you decide which diversification strategy is right for your situation and risk tolerance. Whatever the mix, keep adjusting it as your needs change over time.
Learning Your Tax Obligations
Taxes can majorly impact your retirement finances, so understand what tax obligations may apply to you. Depending on the type of investments and accounts you own, you may be subject to taxes like capital gains or state income tax.
Be prepared for changes in the tax laws and consult a financial advisor or CPA who knows how these changes affect retirees.
Learning to Manage Property Gains
You may enjoy tax benefits and other gains if you own a home or other property. It’s crucial to understand the market trends in your area and how they might affect your investments.
Be aware of changes in zoning laws, taxes, property values, and local median incomes, as these can all influence the value of your real estate investments.
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