Tips for Managing Your Finances in Retirement

By Tommy Clarkson from the January 2013 Edition

Living in retirement isn’t always life at the beach, even in Manzanillo or Puerto Vallarta; it requires an understanding of key financial issues and careful planning, as well as a close, positive relationship with your financial advisor.

For a stress-free retirement, here are three of the most common mistakes that people make, along with suggested strategies for avoiding them.

Mistake #1- Spending too much too early

Periodically re-evaluate your budget to ensure it is still realistic.

Determine how much you need to put aside to sustain your budget throughout your retirement. If your savings do not match up, gradually pay down debt and increase annual savings.

Mistake #2 – Not knowing the consequences of taking distributions

Don’t withdraw funds without knowing the rules governing withdrawals.

Decide whether you can put off taking distributions until you reach age 70?, so your money can continue to grow tax-deferred.

o Plan your distribution payouts according to your life expectancy. Withdraw as much as you need for living expenses while keeping the bulk of your assets working for you.

o Withdraw first from savings and taxable investment accounts; only then turn to tax-advantaged accounts.

o When you do tap tax-advantaged accounts, know the consequences.

o Consider opening a Roth IRA. You can also roll over amounts in a Traditional IRA to a Roth IRA, if certain conditions are satisfied.

Mistake #3 – Not knowing how and when to grow your assets

o If you need your assets to grow over 10 years or more, consider putting the majority in stocks (and remember to take your heirs into that time consideration).

o If you require current income, consider investing the majority of your assets in bonds, preferred equity and/or convertible.

o If you seek stability of principal and don’t need to grow your assets, consider putting the majority of your portfolio in cash equivalents.

Yann Kostic is a Money Manager and Financial Advisor (RIA) with Atlantis Wealth Management specializing in retirees (or soon to be), self-reliant women and Expats in Mexico. Yann works with TD Ameritrade Institutional as the custodian of client’s assets. He splits his time between Central Florida and the Central Pacific Coast of Mexico. Comments, questions or to request his Newsletter “News You Can Use” Contact him at Yannk@AtlantisWealth.com, in Mexico: (314) 333-1295 or in the US: (321) 574-1529.

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