According to research from the National Council on Aging, 80% of American seniors struggle financially or are at risk of economic insecurity when they retire.
For some seniors, one option is working longer to make money and reduce financial risk. But this isn’t a long-term solution — you deserve the chance to retire in comfort and in control of your financial future. Accomplishing this goal requires a shift in financial focus to manage concerns around healthcare costs, income longevity, legacy and your preferred lifestyle.
Here are seven smart moves to make managing finances in your 70s easier.
1. REEVALUATE YOUR RETIREMENT INCOME STRATEGY
The first step for late-in-life financial planning is comparing income to expectations. Do you have enough money coming in to support your current lifestyle, meet future goals and handle unexpected costs? Common sources of income include your Social Security, pension, required minimum distributions from your IRA and any annuities or other investments you hold.
Talk to a financial advisor about ways to optimize your retirement income strategies. Even if current sources are enough to cover costs, you may be able to consolidate or simplify accounts to reduce complexity and limit the cost of management and distribution fees. Advisors can also offer insight on ways to generate consistent, tax-efficient cash flow.
2. DOWNSIZE OR RELOCATE TO LOWER YOUR LIVING COSTS
Lower living costs can help your income go further. Common options include downsizing into a smaller house or condo, moving into a retirement community or purchasing a similarly-sized home in a lower-cost neighborhood.
This approach offers several benefits, including reduced upkeep costs, potential tax savings and more cash on hand from any equity you have in your current home.
Before making the move, however, consider emotional and practical factors. While leaving the home you love can save money, your connection to the property may be worth more than monetary gain. Or, you may simply need time to process the move. Practically speaking, make sure you have a plan to keep what you need and sell or donate what you don’t.
3. REVIEW AND SIMPLIFY YOUR INSURANCE COVERAGE
Many seniors have multiple insurance policies, including vehicle, home, life, health, long-term care and Medicare supplements.
After 70, it’s worth reviewing these policies and simplifying them where possible. For example, you may have a vehicle or health care policies you no longer need or multiple sets of redundant life insurance coverage. Eliminating these policies can save money every month without impacting future security.
It’s also a good idea to ensure that policy beneficiaries and ownership align with your estate goals. Depending on family circumstances and financial health, you may wish to change beneficiaries or modify ownership to ensure maximum benefit value.
4. EXPLORE A LIFE SETTLEMENT FOR UNNEEDED LIFE INSURANCE
If you have a life insurance policy you no longer need, don’t let it lapse — it may have market value.
Selling your policy to a third-party buyer or investor is known as a life settlement, and it can mean significantly more money in your pocket than taking the surrender value. Most life insurance policies are eligible for settlement, but some term policies may not qualify. Your policy must have a face value of $100,000 or more.
Speak with your financial advisor to see if your policy qualifies. If so, they can work with you to find an interested buyer. Once your policy is sold, you receive a lump-sum value in cash. The buyer takes over the premium payments and becomes the beneficiary. When you die, the death benefit goes to the buyer.
The money gained from a life settlement can be used to fund any part of your late-life retirement savings plan. For example, you could use the money to cover long-term care costs, supplement your current income or pay for more immediate needs such as medical expenses or home repairs.
5. PREPARE FOR LONG-TERM CARE COSTS
Even if you’re in great shape at 65, 70 or 75, there will likely come a time when you (or your spouse) will require ongoing medical care. This may take the form of in-home care, skilled nursing visits or a more permanent move to assisted living facilities.
No matter what type of care you need, cost is the common theme. Prolonged, professional care is expensive and can put significant strain on your budget. Potential options to mitigate the monetary impact include long-term care insurance, Medicaid planning or hybrid annuities. You may also consider contributing to a dedicated fund each month, and even jump-starting this fund with the proceeds from a life settlement.
6. CREATE (OR UPDATE) YOUR ESTATE PLAN
Later-life financial planning includes wills, trusts, powers of attorney and healthcare directives. As you move into full retirement mode, it’s a good idea to revisit these documents and ensure they are up to date. Make sure the right funds are going to the right people after you pass and that your health directives reflect your preferences if you are injured or become terminally ill.
Start by discussing your plans with a qualified estate attorney or planner to get a sense of what you have, where it’s going and how you can make changes, if needed. Then, sit down with your family and talk about the plan for assets such as property, investments and inheritance.
7. TALK TO YOUR FAMILY AND TRUSTED ADVISORS
For many retirees, talking about what comes next can be tough. However, open communication can reduce the stress of late retirement planning down the line. Bring in your financial advisor, CPA or attorney to help you draft a coordinated retirement plan that considers your current needs and accounts for long-term goals.
If you’re considering options such as downsizing, life settlements or gifting, speak with your family about the implications of these actions and what happens to the funds they produce. The clearer you are up front, the easier financial management becomes over time.
TAKE CONTROL, ONE STEP AT A TIME
Financial planning in your 70s is less about growth and more about gaining clarity, comfort and control. Visibility into your finances lets you take actions that set you up for long-term comfort and provides complete control over your assets.
But remember — you’ve got time. You don’t need to do everything on the list all at once. Start with one move and build from there. For example, if you have a life insurance policy you no longer need, now is the perfect time to explore its hidden value and create a solid financial foundation for your future.
Ready to explore the value of your life insurance policy? Life Settlement Advisors can help. Let’s talk.
