How To Declutter Your Retirement Finances

There’s a good chance you don’t really need all the various financial accounts, insurance policies, and investments you’ve accumulated over the years. If you’re like most people, you likely just set things up, then left them alone because you’ve been too busy working and living your life to dig into the weeds of your finances.

Retirement is a good time to take a close look at your finances, declutter to get rid of items that no longer serve you, and organize for the next few decades of your life.

The Problem With Disorganized Finances

Messy finances can cause several problems:

• You could be incurring unnecessary service fees and other charges.
• Unnecessary accounts could distract you from focusing on the most important decisions that could improve your financial security in retirement.
• The more accounts you have, the more vulnerable you are losing money to fraud or being hacked.
• In your later years, you might need someone to help manage your day-to-day finances and investments. By decluttering your finances now, you won’t leave them a mess to clean up.

Why Decluttering Your Finances Is An Essential Retirement Task

The best way to develop a sustainable retirement is to make sure your lifetime retirement income is large enough to pay for your living expenses throughout a potentially long retirement. You’ll want to explore all the resources you have that can generate retirement income and squeeze out the most income from each of them. You might even be able to generate additional retirement income by redeploying assets that have been used for other purposes, such as whole life insurance and home equity.

To help ensure you can afford a long retirement, you’ll also want to reduce your living expenses to just the amounts you absolutely need to support your life and be happy. At the same time, by simplifying your finances, you’ll have more time to enjoy your life now instead of being bogged down managing your various accounts. Decluttering your finances will also help you prepare for your later years when you’re less able to manage your day-to-day finances.

7 Ways To Better Organize Your Retirement Finances

Here’s a checklist of steps that can help to put your finances in order as you transition into retirement:

1. Take inventory of your expenses. Review your checkbook, credit cards, debit cards, and online budgeting programs to get a better idea of all the things you spend money on. Are there items you could eliminate or at least cut back on?
2. Make a list of all your general credit and debit cards, retail credit cards, and auto-pay subscriptions. Be ruthless and eliminate any unnecessary accounts or combine them when appropriate.
3. Apply the same thinking to your retirement accounts and investments. You might have accumulated a handful of 401(k) accounts and IRAs over the years, particularly if you’ve changed jobs a few times. Consider rolling over and combining old 401(k) accounts into IRAs at one institution. Doing so will make managing your money easier.
4. Look for ways to use auto-pay for necessary expenses, like utility bills, movie or periodical subscriptions you still use, and monthly premiums for medical insurance and other insurance premiums.
5. While you’re reviewing the accounts you manage online, use two-factor log-in and all other security features that you’re offered to reduce your vulnerability to fraud.
6. Review your life insurance policies to determine their usefulness. You may no longer need them if your kids have grown up and are living independently. See if you can reduce your monthly premiums or redeploy your whole life insurance to generate retirement income or help protect against long-term care expenses.
7. Examine your health insurance policies to make sure you have the coverage you need at this point in your life. Most retirees only need a comprehensive medical plan before age 65, and after age 65 they need Medicare, a plan to fill in Medicare’s gaps, and a prescription drug plan. Once you’re eligible for Medicare, you can simplify the amount of effort you put in looking for health care providers and managing your bills by combining all three coverages with careful shopping for a Medicare Advantage Plan.

While decluttering your finances might not be the most fascinating part of your retirement preparation, it can be the most effective. You’ll also feel better when you finish, just like you do when you clean up a messy room. For the sake of your retirement, think seriously about spring cleaning your retirement finances!