As the oldest baby boomers turn 80 this year, it's a crucial time to focus on financial planning and ensuring a secure future. The path to financial freedom in your golden years is not just about saving; it's about making smart moves to protect and preserve your wealth.
When you reach this milestone, your financial priorities shift. Instead of aggressively growing your wealth, the emphasis is on safeguarding it for yourself and future generations. As Jonathan Connolly, President of Wealth Advisors Trust Company, puts it, "This isn't about cutting back; it's about gaining clarity." When retirees understand how their spending aligns with long-term projections, they can make confident decisions about travel, gifting, and enhancing their lifestyle.
Here are four essential money moves for anyone turning 80 this year:
Revisit Your Estate Plan: Plans can change, and at 80, it's time to update your legal and estate documents, such as wills and trusts. If you haven't already, services like LegalZoom or Quicken WillMaker & Trust can help you create these essential documents. While doing so, confirm the beneficiaries on your retirement accounts and insurance policies.
Protect Yourself from Scammers: Elder fraud is a serious issue, costing seniors over $3 billion annually, according to the FBI. To safeguard your finances, set up transaction alerts on your bank and credit accounts. If you're not planning to take out loans soon, consider freezing your credit through the credit bureaus. Additionally, consider identity theft protection services that can monitor and protect your personal information, including your Social Security number and passport details.
Keep Cash in Liquid Accounts: As you age, simplicity in managing finances becomes key. Keep the cash you need for expenses in safe, liquid vehicles like high-yield savings or money market accounts. This ensures easy access to your funds and peace of mind knowing they're protected. Share the details of these financial accounts with your family as well.
Feel Comfortable About Spending: Turning 80 is a time to enjoy life and spend on experiences that bring joy. This aligns with the "Spending the Kids' Inheritance" (SKI) trend, where boomers focus on indulging in luxurious experiences rather than leaving everything to their heirs. With rising costs and increased life expectancy, boomers see this as a reward for their financial discipline over the years. Connolly suggests that this "strategic spend-down" can enhance quality of life, reduce future tax burdens, and prevent income from pushing into higher tax brackets. For some, the high costs of even a modest retirement may deplete the inheritance they hoped to leave.
If you're unsure about your spending, consult a financial professional for personalized advice. Remember, financial planning is a journey, and making informed decisions is key to a secure future.
