Financial planning is important at every age and stage of your life, but as we get older, the way we spend and save changes, meaning good financial habits take on even greater significance. How do you navigate this time and ensure your nest egg can carry you the distance? While everyone has different financial needs and assets, from budgeting and optimizing retirement income to setting short and long-term goals, these tips are here to help you in your quest for financial health and security and avoid complications as you age.
Do you have a financial plan? If so, great job. But that said, have you recently reviewed that plan? You may have received guidance and made plans a decade ago that might not be relevant today. The importance of staying on top of this can’t be understated – the older you get, the more you may need to rework your financial plan.
If you don’t have a plan, it’s time to get started. Your financial plan should include sources of your current and future income, the value of your assets and investments, your current and future living expenses, and your tax, insurance, and estate planning. Sound overwhelming? Start with the fundamental part of your plan: a budget. Having a clear understanding of your expenses can help you stretch your funds efficiently and maximize your money – creating a retirement budget and spending plan means you have to factor everything in (including the unexpected, but more on that later) including but not limited to fixed monthly expenses (mortgage payment, property taxes), flexible monthly expenses (groceries, gas), periodic expenses (seasonal, home improvements), and discretionary expenses (entertainment, travel). Once you’ve filled in all the blanks, you’ll be in a better position to lay out a blueprint for your saving and investment strategies.
While you might want to jump to help your kids and grandchildren financially, it’s also important to invest in yourself and your well-being. Creating a budget and balancing it against your other sources of income can help make sure you have peace of mind, and enough funds to live a full and healthy life.
Don’t worry. It’s not too late to learn how to make your money work for you. To boost your financial literacy, you don’t have to read The Economist cover-to-cover. There are experts out there that can guide you in money management and wealth preservation. Getting professional advice on everything from tax credits and deductions to converting your RRSPs to RRIFs and smart investing can help you fund a fruitful retirement and avoid complications down the road.
Elder fraud has become an epidemic. With financial savings, home ownership, and healthy credit, many seniors become targets of scams. Some scenarios that should raise red flags include communications from “grandchildren” needing money sent immediately, being awarded a non-existent prize, get-rich-quick schemes, and a person pretending to be a bank or government employee in search of your financial information. How to protect yourself from these schemes? You can put safeguards in place such as alerts when large bank withdrawals are made, debit card limitations, and registering on “Do Not Call” lists. If you’re still concerned, your bank and financial advisor can give you guidance on how to protect your funds.
Good financial planning takes the future into consideration. While you might have a handle on balancing your needs through a combination of saving and investing, have you factored in the unexpected? As we age, new challenges can arise, and you need to be prepared for unforeseen expenses by siphoning money into an emergency fund. Yes, with an emergency fund, you’ll be ready to expect (and face and fund) the unexpected.
Another step you can take to reduce stress and strengthen your peace of mind is to set up a financial Power of Attorney. In doing so, you appoint someone (or several people) you trust to manage your financial affairs if you’re physically or mentally unable to do so. While this document will ensure your wishes are respected while you’re alive, preparing a will for when you’re no longer here will also honour your wishes in the future and reduce burdens and complications among loved ones.
After a lifetime of working and saving, how can you make sure your Golden Years shine bright? Financial planning, goal setting, safeguarding your funds, and professional guidance can help ensure your financial health and reduce your stress for years (and generations) to come.
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