Last week, we discussed the difficult fiscal years we’ve seen recently, and how they’ve impacted financial planning across America. As the economy has struggled, many people have had to restructure their retirement plans to account for lost funds. In addition to the 5 tips for retirement planning that we gave you, here are 5 more money saving strategies for retirement planning!
Reach Out to Social Security
You will likely have a number of remunerative options when it’s time to collect your Social Security benefits, so be in touch with a representative to explore them. Oftentimes, people have five or more choices regarding when their payments will begin and how much they’ll get. Meet with a Social Security Administration counselor to calculate your benefits and make sure you’re doing it properly.
Think Long and Hard About Your Real Estate
Before you jump into refinancing your existing mortgage in hopes of lowering your monthly payments, consider the big picture. By refinancing, you’re adding to your overall debt by taking on new fees from the refinancing transaction, as well as extending the length of time you’ll be in debt. If you’re over 50, a smarter option may be to transition your current mortgage into a 15-year loan. You’ll save money in interest over time, but you’ll also be debt-free (as far as your mortgage is concerned) by the time your 65 or 70. Even if it means you have to downsize to a smaller, more affordable home, shortening the term of your loan is usually a good fiscal decision.
Some mutual funds have hidden or exorbitant fees attached to them. It’s especially important to avoid paying unnecessary fees when you’re trying to recover from a financial downturn. If your mutual fund advisor is asking for more than 2%, that’s too much, and you should explore alternate options. There are some advisors who are fee-only or fee-based, an option you should consider to avoid inflated fees.
Ask a Professional
Generally speaking, a financial planner will be able to help you recover more money from what you’ve lost than what you’ll pay for their help, which makes your investment in their services worthwhile. Sometimes banks or mutual fund companies actually offer free retirement planning! You can also read up online to educate yourself about some best practices if you don’t want to hire someone to do it for you.
Plan Ahead to Avoid Another Upset
The absolute first step you should take is to set aside enough money to cover the expenses you’d incur over a few months. Put the money in a stable, liquid account, such as a money market fund, and then plan your strategy if you ever face another fiscal collapse in the future. You can set up a stop-loss plan that will move your investment into US Treasuries when the market drop reaches 10 percent, for example. Having a plan set up in advance ensures that you won’t make impulsive investment choices when you’re stressed the next time that the market drops.
As always, the team at Defreitas and Minsky LLP is available to help you with all of your financial planning needs, especially setting up money saving strategies to plan for your retirement! Get in touch with us today to set up an appointment.