Why You Might Want to Keep Your Life Insurance in Retirement

One of the questions I often get from clients who are planning on retiring is whether they should maintain their life insurance. Normally, one might think that that they do not need life insurance in retirement because life insurance is designed to protect against  financial  loss, and if you have enough money to retire, why would you need it? But, in certain situations, there are good and valid reasons to continue your life insurance during your retirement: 

Deciding to Age in Place – Or Not

Retirees are individuals, not a homogenized demographic. But there is one issue that galvanizes them. The great majority of retirees, no matter what their age, want to live out their lives in their homes.

When a retiree’s physical limitations change, it is likely time to consider a new living arrangement. But before you make any decisions, ask yourself these three key questions:

Where Am I Going to Live Now That I’m Retired?

A really important part of your retirement vision is deciding WHERE you are going to live. Housing can be one of those decisions that is really difficult to “get right.” Once you’re retired, and no longer tied to your current home or town by your job, the possibilities can seem endless – and feel overwhelming! Getting this decision wrong can be expensive. 

Budgeting For Travel – Now and Later

Whether it’s palm trees, museums or shooting the rapids, travel continues to be a popular pastime for retirees. While the scenery may change from year to year or season to season, one thing never changes: travel can be expensive. Planning ahead and traveling in the off season can save.
Many retirees opt to travel early in retirement when health is not a concern. For some, travel expenditures are assumed for a set number of years during the first part of retirement. For others, travel is planned throughout retirement. 

What’s the best way to handle company stock without getting killed by taxes?

Company stock, especially if it was awarded as part of a long term incentive package, can be a terrific way to build wealth. But it can be a double-edged sword, too. Over-concentration in a single stock probably represents one of the biggest mistakes we have seen retirees make. And when the stock is from the company where they built their career, they may have a strong emotional attachment that can cloud judgement. 

Setting aside funds to cover future health expenses

The old saying used to be that you could only count on two things: death and taxes. Today, we need to amend that include a third constant: the rising cost of healthcare. For some time now, medical costs have increased at a pace that exceeds inflation. No one is predicting a change in that pattern.

To cope with these rising costs, we recommend you treat health expenses just as you do the other line items in your budget. Factor this cost into your budget and understand its impact on your cash flow.

Consolidating Company Retirement Plans

For most people, I believe consolidating your various company retirement plans and IRA’s into a single IRA is the best route to go for a number of reasons 1,2,4:

Growth, Risk & Safety: Investment Portfolios and Retirement

Years ago, conventional wisdom was that your portfolio should get more conservative as you age. One widely quoted rule of thumb was that the amount you should have in bonds should match your age. So a 60-year-old would have a 60% bond/40% stock portfolio, a 70-year-old would have a 70% bond/30% stock portfolio, and so on.

What Should I Do About My Pension?

If you are able to ask this question, consider yourself fortunate.  Many, if not most retirees today do not have a company pension, and for them, the only guaranteed lifetime income stream they have is Social Security.  Usually, retirees are offered pension payments in various different forms and amounts ranging from a) a lump sum distribution of the full value of the pension that can be rolled over tax free to an IRA, to b) a series of equal monthly payments for the lifetime of the retiree and their spouse. 

When the Paycheck Stops: Cash Flow and Retirement

Once the paycheck stops, most retirees wonder how to best meet their cash flow needs. Unless you have saved a tremendous amount of money, living on just dividends and interest could mean a lower life style than you desire, especially in this low interest rate environment. But even if interest rates eventually return to more “normal” levels, the days of “clipping coupons” is not likely to return. Part of the reason is because retirees are living so much longer, and need their portfolio to grow in excess of the inflation rate. And that means having some portion of their portfolio in equity-based investments, which generally don’t produce high levels of income