The Carr Report: Financial planning tips for retirees

 We spend more time reflecting on life after retirement than we do planning, saving, and investing for retirement. We dream of the day when we’re no longer required to get up and go to work. We think to ourselves, “I’ll have more time for myself.” We look forward to being able to sleep in every day. We reason that we’ll have more time to do the things we love and enjoy. Things like spending more time with family and friends, traveling the world, pursuing hobbies, volunteering at local nonprofit organizations, and exercising more.

The first couple of months of retirement is refreshing. It feels like an extended vacation. You’re free of the daily grind and you’re feeling fully rested.  After a few months have passed, you come to realize that although your schedule has become more flexible, others are still busy living life. Your children and many of your friends are still actively working. Your grandchildren are busy with school, various activities and hanging out with their friends. Traveling the world seems fun when you’re dreaming about retirement. Now that you’re retired, you realize that traveling the world on a frequent basis is expensive. You often find yourself bored and lonely. You come to realize that your former career gave you structure, purpose, and a paycheck that is bigger than your retirement income.

We spend so much time thinking and dreaming about what we’re retiring from, we neglect to plan and focus on what we’re retiring to. The overriding question many retirees find themselves asking is, “Now what?” 

Here are some common questions recent retirees find themselves pondering:

  • What do I do with all this free time?
  • What can I do to add structure and purpose to my life?
  • How do I manage my retirement savings to ensure that it lasts?
  • Should I downsize my home or move to a more affordable area?
  • How do I budget for travel and other retirement dreams?
  • Should I consider part-time work or starting a business?
  • What are my health care options and how do I manage health care costs?
  • When should I start taking social security?
  • Am I still required to file a tax return?
  • What estate planning steps should I take?

Retirement is a significant milestone that marks the transition from decades of work to a period of relaxation and enjoyment. However, it also brings new financial challenges and considerations. As retirees, managing your finances wisely is crucial to ensuring that your golden years are comfortable and stress-free. In this article I’ll provide some financial strategies and tips specifically tailored for retirees that will answer many of the aforementioned common questions.

Create a Comprehensive Budget: Your retirement income might come from various sources such as pensions, savings, investments, and social security benefits. Understanding your income flow is the first step. The next critical step is to establish a detailed budget. Account for all your fixed and variable expenses, and don’t forget to include occasional costs such as travel, gifts, and health care expenses. A well-planned budget helps prevent overspending and ensures your savings last.

Prioritize Health Care Planning: Health care is often one of the most significant expenses for retirees. Consider all your health care options, including Medicare and supplemental insurance policies. Be proactive about understanding your benefits and the coverage gaps you might need to fill. Also, explore setting aside funds for long-term care, which may become necessary and is not typically covered by Medicare.

Manage Withdrawals Wisely: Strategize your withdrawals from retirement accounts to minimize taxes and ensure your funds last. Understand the rules surrounding Required Minimum Distributions (RMDs) and consider the tax implications of withdrawing from different accounts like 401(k)s, IRAs, or Roth IRAs.

Re-evaluate Your Investment Strategy: Your investment strategy in retirement should reflect a more conservative approach compared to your working years, focusing on preserving capital and generating income. However, some level of equity exposure might still be necessary to keep up with inflation. Regularly review your investment portfolio and adjust your asset allocation as needed.

Stay Informed About Taxes: Retirement doesn’t exempt you from taxes, but it does change your tax situation. Understand how your retirement income is taxed and explore tax-efficient withdrawal strategies. Be aware of potential tax deductions and credits for which you may be eligible.

Consider Downsizing or Relocating: Retirement is an opportunity to reassess your living situation. Downsizing to a smaller home can reduce maintenance costs, utility bills, and property taxes, freeing up more funds for your retirement years. Alternatively, relocating to a more affordable or tax-friendly state can also significantly impact your financial well-being.

Plan for the Unexpected: An emergency fund isn’t just for the working years; it’s crucial in retirement, too. Unforeseen expenses, such as home repairs or medical emergencies, can quickly deplete your savings if you’re not prepared. Aim to have a reserve of funds that’s easily accessible for such situations.

Explore Part-Time Work or Hobbies That Pay: Retirement doesn’t mean you have to stop working altogether. Many retirees find joy and financial benefits in part-time work or turning a hobby into a small income stream. This can not only supplement your income but also keep you engaged and fulfilled.

Stay Socially Engaged and Active: While not directly a financial tip, maintaining an active social life and staying engaged in activities you enjoy can have significant indirect financial benefits by promoting physical and mental health.

Protect Against Financial Scams: Retirees are often targeted by financial scammers looking to exploit their retirement savings. It’s essential to be vigilant and cautious when approached with unsolicited investment offers or requests for personal information. Protecting your financial assets and identity should be a top priority.

Ensure Your Estate Plan is up to date:  Ensure all your documents are up-to-date and reflect your current wishes. This includes your will, trust documents (if applicable), powers of attorney for both finances and health care, and beneficiary designations on accounts like life insurance, IRAs, and 401(k)s. It’s also wise to create a comprehensive list of assets, accounts, and important contacts for your executor or heirs. Regularly reviewing and updating these documents in response to life changes—such as marriages, divorces, births, or deaths in the family—can prevent complications and ensure your estate is managed according to your wishes.

(Money Coach Damon Carr can be reached at 412-216-1013 or visit his website @



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