Money Management in Retirement

Money Management in Retirement

After decades of hard work and diligent saving, you are finally retiring. Congratulations! Whether you're ready to relax or planning your next adventure, it's time to focus on money management in retirement. To be sure that your savings will stretch to fit your retirement goals, review your investment portfolio and your shifting financial responsibilities.

Money Management in Retirement

Review your retirement income. 

When you retire, your biweekly or monthly paycheck will likely be replaced by income arriving from varying sources on varying schedules. For example, you may receive Social Security benefits, pension distributions, and annuity payments, and if you are 70 1/2 or older, you will need to take minimum distributions from your retirements plans like 401(k)s, 403(b)s, and IRAs. Manage these income sources efficiently, perhaps by using direct deposit or remote deposit services.

Change your budget to fit your new lifestyle. 

When you retire, your lifestyle and financial responsibilities will change. You may wish to plan a dream vacation or split your time between dual residences. In addition, when you lack an employer, for the first time you may be responsible for quarterly estimated taxes and insurance premiums (like health care). Review all of your financial responsibilities to create a budget. Then, compare your budget to your retirement income to be sure that your income will cover your spending.

Invest excess cash flow. 

If your income streams are producing more cash than you need, invest that excess cash flow for more growth. Consider liquidity (i.e., how quickly you will need to access the funds) and risk/return (the greater the risk, the greater the potential return).

Keep a portion of your savings in an easily accessible place with high liquidity, such as a money market fund or short-term treasury bill, so that you can use it for everyday spending. Short-term savings (for a vacation or a new car, perhaps) require less liquidity and might be saved in treasury bonds or FDIC-insured CDs that correspond to the date you will need access to the money. Finally, keep an emergency fund for sudden expenses, which might be split between an account with high liquidity and an account with low liquidity.

Be sure that your money can be moved for convenience, accessed quickly, and invested for increased growth. You may wish to consolidate by moving all of your funds to one provider, which will make it easy to keep track of your funds and transfer them from one account to another.

Create a plan if you have a shortfall. 

If your income and savings will not cover your expenses, you will need to make some adjustments. First, you might consider working beyond your planned retirement date. Note that this may affect the amount you receive from Social Security. Second, reduce your expenses by revising your budget. You could downsize to a less expensive home, purchase a cheaper car, or eliminate some luxuries (eating out, new clothes, new gadgets, etc). Third, you could rebalance your investment portfolio. If you're willing to take a risk, you could increase your long-term return potential by investing in a higher percentage of equities.


This is only the beginning, of course. There is a lot more to learn about money management in retirement, so continue researching and consider working with a financial advisor. Additionally, if you're concerned about your retirement finances, be sure that you're working with a reliable financial institution that can provide beneficial services and advice.

Speaking of which, are you interested in joining a credit union? If you live or work in southwest Missouri, check out BluCurrent Credit Union. With our unbeatable loan options, 6,800 shared branches across the country, and fantastic customer service, we might be the perfect financial institution for you. To learn more about our services and benefits, please stop by one of our branches or explore our website.

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