X Ways Retirees Can Protect/Fortify Their Finances

December 23, 2022 at 10:00 AM EST

We all want to retire comfortably and have financial security in our later years. While nothing is certain, those who want a comfortable retirement can take steps to fortify their finances from known risks and ensure consistent cash flow. Here are four ways retirees can help protect their finances:

Plan for Changes in Cashflow

As people enter retirement, their expenses often change. With children grown and out of the house, many retirees find that their overall expenses go down. But even as spending changes, it’s important for retirees to be mindful of their finances and ensure that they are prepared for any unexpected costs. One of the best ways to do this is to track spending so that retirees can ensure that it’s in line with the income they’ll be able to generate with their savings.

This can also help them identify areas where they may be able to cut back on spending. For example, retired couples may find that they’re still spending on a number of subscriptions that they’re no longer using.

Start with guaranteed income that keeps flowing

Between the ups and downs of the market and the fact that no one knows how long they’ll live, trying to live off savings (without outliving it) can be challenging. That’s where guaranteed income from Social Security, a pension (if you’re lucky enough to have one) and an annuity come in. These are all sources of income that are stable and designed to continue until the retiree dies (even if they live a long time). Many retirees use guaranteed income to cover essential expenses like housing and food.

Plan to manage inflation and taxes

Today’s retirement can last 30 years or more. That’s great news, as retirees will have a long time to enjoy their golden years. But it’s also a challenge as inflation and tax changes can eat away at savings over time. That’s where it’s important for retirees to keep a portion of their nest egg invested and to take advantage of a mix of taxed savings and tax-advantaged savings like Roth accounts and even the cash value of permanent life insurance like whole or universal life insurance. Retirees can borrow against the cash value for any reason. This can serve as additional cash flow in retirement to help manage taxes.

Plan for market volatility and surprise costs

While it’s important for retirees to keep a portion of retirement savings invested, it’s equally as important to have a cash reserve to help continue funding living expenses through down markets or if you get a surprise bill one year. While this could be money you keep in a bank account, this is another place where the cash value of permanent life insurance can help.

The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.

Source: Northwestern Mutual

Contact: Don Klein, 1-800-323-7033

Contact Information:

Name: Don Klein
Email: donklein@northwesternmutual.com
Job Title: Assistant Director - Field & National Grassroots Public Relations

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