Carnegie Investment Counsel Blog

7 Ways to Simplify Finances Before Retirement

Posted by Gary Wagner on Apr 14, 2020 11:29:00 AM

How-to-simplify-finances-before-retirementAs you approach retirement, organizing your finances will be one of the most critical steps you take when beginning your transition out of the workplace. There are plenty of retirement planning tips and philosophies out there, but many people in their 50s with $500k or more saved don’t yet know how to simplify their finances before retirement.

Spoiler alert: It’s probably time to reach out for some professional help, but here are seven ways that you can organize, plan and streamline your money before meeting with an advisor.


7 Steps to Simplify Your Finances Before Retirement:

  1. Estimate planned expenses in retirement.
  2. Create a monthly budget.
  3. Consolidate accounts.
  4. Review insurance and healthcare policies.
  5. Assess your retirement investments.
  6. Assess your spending habits with a clear eye.
  7. Reduce your outgoing expenses.


1. Estimate planned expenses in retirement.

As you approach retirement age, start estimating your personalized predicted income and outgoings in retirement. These calculations can form the basis of a financial timeline for future spending. Doing “the math” will help you understand the exact amount of savings needed to sustain the desired lifestyle in retirement at any given age.


2. Create a monthly budget.

After estimating your retirement savings needs, strict budgeting may be required to prevent overspending in any given month or year. Since “income” in retirement is based on savings rather than working hours, it becomes a limited and finite resource. Separating payments into different categories means you can break down your spending habits and set a cap on those fancy dinners that may not be so sustainable over the next 20, 30 or 40 years of retired life. There may be a range of occasions and events to budget for, both short and long term, for example:

  • Contributing to a grandchild’s 529 education savings account
  • Planning a vacation within the next year
  • Budgeting for care later in life


3. Consolidate accounts.

Many people in their 50s have had multiple jobs and even career paths over their working years. This could mean that they own various savings accounts and IRAs. Combining the funds from these accounts into one “super” account means that all your money is in one place. You are even able to combine IRAs with old 401k accounts. Consolidating everything makes it much easier to track your budget and plan for the future as you are just pulling money from one account.

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4. Review insurance and healthcare policies.

Reviewing your insurance policies means that you will be able to check the cost and coverage match with your current and predicted needs. Health insurance is an important insurance policy to monitor as you age. Health is likely to decline with age and the likelihood of relying on medical professionals increases. Getting more comprehensive coverage may provide peace of mind with regards to long-term care, and can also cover you in case of an emergency.


5. Assess your retirement investments.

Now is the time to check in on your investments. It may be worthwhile to construct a total returns portfolio. This could help you calculate the predicted returns you may achieve. Alternatively, it could be worthwhile to look into moving some money over to retirement income funds. These are specialized mutual fund accounts that spread your money over a diverse portfolio of stocks and bonds and are ideal for imminent retirees.


6. Assess your spending habits with a clear eye.

Settling into your 50s means that your lifestyle might look significantly different from your earlier years. This change is likely to be reflected in your income and expenses. Taking a deep dive into how you spend your time and money should help you determine what is important to you and where the money goes. It could also mean that you can trim down on unnecessary spending habits such as:

  • Spending $25 or more per week at the coffee shop
  • Overly frequent dinners out
  • Online charges you haven’t taken the time to review


7. Reduce your outgoing expenses.

Finally, the quickest way to save money in anticipation of retirement is to reduce your monthly outgoings. For some people, outgoings may decrease during retirement since certain expenses associated with working are cut, such as commuting costs. But, keep in mind this is not always the case. Expenses may not automatically go down. Still, reducing outgoings is an excellent way to assure security for a long and possibly financially stable retirement. You could try to find a way to cut your bills by eating out less or making strides to pay off debt.

In conclusion, helping you create a more financially stable retirement with help from financial planning and investment management services is our job. We help people with these calculations and wealth management every day. Schedule an appointment to talk with an advisor today.


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Topics: Financial Planning

Gary Wagner

Written by Gary Wagner

Gary Wagner is Principal and Chief Operations Officer. He also works directly with clients to provide investment and strategic wealth advice. Gary sits on Carnegie’s Investment Committee and also manages the firm’s strategic initiatives and operations.

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