It’s also wise to record your financial goals and plans, such as how much money you expect to withdraw from savings every month.
“The more detailed the information about your spending requirements and investment goals, the greater your chances of success,’’ says Bob Stammers, director of investor education for the nonprofit CFA Institute for financial analysts.
2. Attack your debt.
Along with putting on pounds, new retirees are prone to running up debt with their newfound freedom. Paying off credit card debt should be a top priority.
After the card debt is zeroed out, use only one card and pay off the balance monthly. If an emergency expense leads to a balance, don’t let it linger or it will erode retirement savings.
If your savings are languishing in a money market account or certificate of deposit earning practically nothing, you can put a chunk of it to greater use by paying off a credit card with an interest rate of 15 or 20 percent. Having savings yields at rock-bottom lows presents a rare opportunity to instantly improve your finances.
“There may never be a better time than now to clear up all of your credit card debt,’’ says Michael Kresh, a certified financial planner in Islandia, N.Y.
3. Invest in dividend-paying stocks.
It’s tough for retirees to get meaningful income on their money from the traditional sources. The best-paying money market and savings accounts yield just 1 percent, five-year CDs no better than 1.95 percent, according to Bankrate.com. Even the U.S. government’s 10-year Treasury note has been hovering around 2 percent.
For a bit more risk in the short term, blue chip stocks that pay dividends offer a combination of reliable income and good odds for share price appreciation over the long haul.
Income investors have few alternatives to dividend stocks in this environment, says Howard Silverblatt, senior analyst for Standard & Poor’s.
