Finances in Retirement - Investments

Financial Spring Cleaning

by Retirement Tips

May 6, 2024

How to Make Sure Your Financial Life is in Order

Spring has arrived! Milder weather and longer days may inspire you to clear the clutter and organize and neaten your home. Why not use some extra energy to do the same with your finances? Here are three spring-cleaning tips for your financial house.

Dust off your post-retirement budget

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By the time you’re 12-18 months away from retirement, you should have a pretty good idea of your fixed expenses for at least the next few years. Now is the time to look at your discretionary spending to ensure you can live within your means when you no longer get a regular paycheck.

According to a 2013 poll by Gallup, over two-thirds of Americans do not have a budget in place (1). Although creating a budget may require time and legwork, having a budget should eliminate stress. Start by gathering your last six to twelve months’ worth of bank statements and credit card statements to get a broad picture of how much you’ve made and how much you’ve spent. Then, look more closely at each of your expenditures. How much do you spend on extras, like entertainment, dining out, or the “latte factor?” Can you reduce fixed expenses like car insurance premiums or monthly cable bills?

After determining your post-retirement budget, consider adopting it for three to six months before leaving the workforce. That way, you’ll have some flexibility to adjust it, if necessary, before you retire.

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Purge your debt

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You may have heard that there are two kinds of debt: good (student loans, mortgages) and bad (credit cards, car loans). But once you stop getting regular paychecks, both kinds of debt can eat into your income. According to, the average household nearing retirement (ages 55 to 64) (2) carries about $145,740 in debt. This amount drops to about $105,250 for people in their mid-to-late 60s, but even that can be challenging to tackle when living on a fixed income.

The best way to eliminate debt is to pay it off while you still bring home a paycheck. There are still options, however, to make the debt payoff a little less painful post-retirement. Look into transferring your credit card debt to a card that offers a low- or zero-rate introductory period—beware of teaser rates that start low and end high. If you own a home, consider taking a home equity loan or opening a home equity line of credit to consolidate your debt. The interest rates on these loans are generally far lower than your credit card’s interest rate.

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Spruce up your asset-allocation strategy (if necessary)

Asset allocation refers to how you divide your investments among the three major asset classes: stocks (which tend to be riskiest but offer a higher return potential), bonds (which can be less risky than stocks but offer a lower return potential), and cash or another interest-bearing, short-term investment option, like a savings or money market account (which are least risky in exchange for a minimal return).

Traditional retirement investing wisdom goes something like this: the closer you are to retirement, the less risk you should take in your portfolio. In the past, many financial planners recommended subtracting your age from 100 to determine the percentage of your portfolio that you should keep in stocks. That’s because people who are decades away from retirement have more time to recoup potential losses that can accompany riskier investments; pre-retirees and those in retirement, on the other hand, generally focus on protecting the savings and investment gains they have accumulated over their working years.


Check out the 4-Box strategy and how it can help retirement investors manage market volatility worries.


However, one of retirees’ top concerns is the possibility of outliving their savings. Imagine your entire portfolio is invested in the most conservative option. In that case, your returns won’t likely keep pace with inflation or the increase in the cost of living. Throw in the fact that many people are now living 20 to 30 years (or longer) after leaving the workforce, and it’s clear that there is no one-size-fits-all strategy for post-retirement investing.

The best way to determine how to invest in the years immediately before — and following — your retirement is to consider your age, your anticipated post-retirement income, and your level of risk tolerance. Remember that your ideal asset allocation does not necessarily depend on your age.

For example, some millennials may need more time to fully invest in stocks. At the same time, some baby boomers are comfortable with a larger-than-typical portion of their portfolio in more aggressive investments. We also recommend assessing your risk tolerance at least yearly; as you progress into retirement, your risk profile will likely change, and you should adjust your asset allocation strategy accordingly.

Still, trying to figure out how to start? Please request a FREE Results In Advance Planning consultation with our financial advisor network member to get a no-obligation conversation about your financial situation and retirement goals.

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Retirement Tips

Retirement Tips is an educational blog dedicated to helping workers and retirees become more knowledgeable about retirement and financial planning.

We want to help readers learn more about their retirement investing options, programs like Medicare and Social Security, and difficult-but-important topics like long-term care and estate planning.

Our goal is to help you make more informed decisions when it comes to your retirement and to make it easier for you to connect with an advisor in your area should you need professional financial advice.

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