Most folks in their 70s are retired. However, that doesn’t mean you are done with retirement planning! There are still things retirees should be doing every year.
One of the tasks to do each year is to update your net worth statement listing all of your assets and liabilities. It doesn’t need to be complicated. Use Word or Excel to list your investment accounts and other assets like your home. Then list any liabilities like a mortgage or car loan. Subtract the liabilities from assets and this is your net worth. Compare your net worth to past years to see if it’s increasing or decreasing. This information helps you budget for the upcoming year.
Then dig a little deeper into your portfolio to see how much is invested in bonds and stocks. A 70-something might have 50 percent or more of their investments in cash and bonds depending on risk tolerance. Don’t forget to keep 2 to 3 years of cash in your portfolio to cover critical living expenses (think food and housing). This cash cushion protects a retiree from having to sell stocks or bonds in a down market.
Another annual to-do for retirees is monitoring your withdrawal rate from the portfolio. The mistake many folks make is using up too much of their savings in their early retirement years. A safe withdrawal rate from your retirement savings is in the range of 4 to 6 percent per year. For example, a $250,000 portfolio will result in $10,000 – $15,000 of income per year (4 to 6 percent respectively) to cover living expenses. Cut back on expenses if you are spending down your investments at a higher rate than 6 percent.
The final task for retirees is to confirm that you have the best Medicare Part D prescription drug plan. Retirees can boost their spendable income by reducing their Medicare costs with the right drug plan that matches the medicines they take. Open enrollment begins Oct. 15 so it is the perfect time to go to Medicare.gov. Click on the “Find Health & Drug Plans” button to begin the process of finding the right plan for you.
This tool is amazing and, in my opinion, under-utilized. Type in all your prescriptions and a list of Part D plans is generated showing monthly premiums, deductibles and overall costs based specifically on your medicines. Be sure to focus on the “Estimated Annual Drug Costs” column of the search results.
What you will discover is that the insurance plans with the lowest monthly premium will end up being the more expensive plans. This is because deductibles and copays are typically higher in these plans. Don’t fall into the trap of just focusing on the plan with the lowest monthly premium. It’s the total cost of premiums, deductibles and copays that matters to your budget.
Financial Planning Days
Do you have a personal finance question? Then be sure to attend San Diego Financial Planning Day Saturday, Sept. 28. The event will take place from 10 a.m. to 3 p.m. at San Diego State University in the Parma Payne Goodall Alumni Center.
You will be able to talk one-on-one with a Certified Financial Planner™ professional for free! Questions can be pretty much anything. Typical topics include buying a home, managing debt, tax reduction strategies, investments, how to save, insurance planning, estate planning and understanding employee benefits. Visit the Web site financialplanningdays.org for more information.
Steve Doster is a Certified Financial Planner™ professional providing commission-free financial advice for do-it-yourself investors. You can reach Steve at Doster Financial Planning by phone 619-688-1192 or email steve@dosterfinancialplanning.com. You can also follow Steve on Facebook, Linked In, Twitter, or blog to get more personal finance advice and tips.
Its going to be tricky. With the income you gave you’re looking at a maximum housing expense of $ 1000 or maybe a bit more, but you already have one mortgage. Subtract that payment from the $ 1000 and all other expenses (taxes, insurance; but not utility payments) and thats how much additional housing debt you can take on. I suspect that number will be so small (or negative possibly) that a bank won’t give you a loan that small, but I could be wrong. No harm asking a bank but I suspect the answer will be no.. For more on loan tips, you can check :- http://loanemu.com/how-to-stop-student-loan-harassment.html