With age comes experience and, in some cases, skillful financial management. However, times have changed and new ideas have come to life. As a Baby Boomer, staying up-to-date on the latest trends and best practices in money management is crucial. Here are 20 secrets that Baby Boomers need to know about money.
Take Advantage of Catch-up Contributions
If you need to catch up in your savings, participating in catch-up contributions is a great way to boost your retirement savings. These programs allow individuals 50 and older to contribute additional money to their 401(k), IRA, or other retirement accounts to get back on track with their savings.
Skip the College Fund
Another money-saving tip for baby boomers is to skip the college fund. College savings accounts, such as a 529 plan, come with high fees and can be difficult to access during retirement years. Instead, focus on saving for yourself first before setting aside funds for future generations.
Shop Around for Insurance
Getting quotes from multiple providers can help you compare coverage and rates to find the best deal. Seniors may also be eligible for discounts that younger generations are not, so be sure to inquire about those as well. Doing your research before signing on with an insurer can help save money in the long run.
Rent Out Unused Space
If you have an extra room, apartment, or house that isn’t in use, consider renting it out. This can be a great way to generate an additional income stream and cover day-to-day expenses. Check with local regulations before renting out space, as this could vary from state to state.
Maintain Your Health to Reduce Health Care Costs
Health expenses can be a major burden for seniors. One of the best ways to reduce costs is to maintain good health. This means eating healthy and exercising regularly, as well as keeping up with regular medical checkups and preventative measures like flu shots. Keeping these costs down through preventive care can help you save money.
Create an Emergency Fund
Unexpected expenses can come anytime—medical bills, home repairs, and more. Set aside an emergency fund to cover these costs so you don’t have to dip into your retirement savings or take out a loan. Aim for six months’ worth of living expenses stored in an easily accessible account.
Use Target Date Funds for Investment
For those who are already invested, consider using target date funds as a simple and easy way to get diversified. These funds automatically adjust their portfolio mix as you near retirement, gradually shifting from more aggressive investments to less risky ones. This approach takes the guesswork out of investing while allowing you to benefit from higher-return investments earlier on in your career.
Invest Your Raise
When you get a raise, it’s tempting to splurge on something special. Instead of doing this, invest the extra money into your retirement savings or other investments. If your employer offers 401(k) matching, contribute enough money to get the full match. You’ll thank yourself later when you have more money in retirement.
Refinance Your Mortgage
Your mortgage is likely your biggest debt, and it’s one of the most expensive. Refinancing to a lower rate can reduce your monthly payments and save you hundreds or thousands of dollars over the life of the loan. Even if there are fees associated with refinancing, they could be worth it if they’re less than what you would save over time.
Hold off Collecting Social Security Benefits
The best way to maximize your Social Security retirement benefits is to delay taking them until you reach full retirement age. The full retirement age is between 66 and 67, but even better if you can delay till you’re 70. By waiting until then to start collecting benefits, you can increase the money you receive each month.
Stay Current on Tax Changes
Tax laws change often, and it’s important to stay up to date so you don’t miss out on potential deductions or credits that could save you money. Keep an eye out for changes in tax law, and talk with a professional.
Live Within Your Means
Living within your means helps ensure that your expenses don’t exceed your income. You can do this by cutting out unnecessary costs and luxuries and only buying the things you need. This way, you can maintain healthy finances and ensure financial security in retirement.
Change Your Mindset About Money
As you age and approach retirement, shift your focus from accumulating wealth to preserving it. This approach means avoiding risky investments and focusing on more predictable sources of income that will provide steady returns over time.
Talk About Money With Other People
Talking about money can be a sensitive topic for many people, but these discussions will help you learn more about money, avoid critical mistakes, and be confident in your financial decisions. Discussing money with your spouse, other family members, friends, and financial professionals is a great way to learn more about the various aspects of personal finance.
Sign Up for Medicare
Once you turn 65, apply for Medicare to ensure that your healthcare costs are covered. You can also look into additional insurance plans such as Medigap – It can help you cover costs related to deductibles, copayments, coinsurance, and more.
Put Yourself First
You may have grown up believing that you should always put others before yourself, but you need to prioritize your financial security when it comes to money. You can do this by saving enough for retirement, setting aside money for emergencies, and creating a plan for long-term care in case something happens.
Continue Stashing Away Money
It’s never too late to start saving for retirement, but the sooner you start, the better. Start by contributing what you can afford and increase it as you can. A variety of tax-advantaged retirement accounts are available, so explore your options and pick one that works best for you.
Be Wary of Scams
Scammers primarily target seniors; why? Because they are likely to have more money saved. Avoid giving out personal information, especially credit card or banking details, and beware of offers that promise easy and guaranteed returns. Be wary of phone or email solicitations from people who you don’t know.
Don’t Put All Your Eggs in One Basket
One of the most essential money tips for baby boomers is to diversify your investments. A mix of stocks, bonds, mutual funds, and other investments spread out over different types of accounts, like 401(k)s and IRAs, will protect your retirement savings from market volatility and economic downturns.
Seek Professional Help
If you’re ever uncertain about your financial future, feel free to seek professional help. A financial advisor can provide personalized advice and strategies tailored to your situation. They can guide you through retirement planning, investing, tax issues, budgeting, and more, allowing you to retire confidently.
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