Legal & Financial Planning

6 Financial Tasks Retirees Should Tackle Now to Stay Independent and in Control

Cameron Huddleston
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Cameron Huddleston
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September 19, 2022
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6 Financial Tasks Retirees Should Tackle Now to Stay Independent and in Control

One of the key needs that people have is to be autonomous. In other words, it’s human nature to want to feel independent and in control. 

For those near or in retirement, financial independence is especially important. You need to have the resources to live comfortably and securely without a regular paycheck. You also need to protect those resources. 

That requires putting systems and safeguards in place. To remain financially independent and in control, tackle these tasks sooner rather than later.

Simplify your financial life 

One of the best steps retirees can take to stay in control of their finances is to simplify their financial lives. Daniel Lash, a partner and financial advisor with VLP Financial Advisors, says he often sees clients with too many financial accounts. They mistakenly believe that their money is more protected, he says. In reality, spreading out your money in many different places can create more risks and headaches.

Lash recommends consolidating retirement accounts into one IRA and moving stock, bond and mutual fund holdings to one brokerage account so you don’t lose track of your investments. If you have several bank or credit card accounts, consider consolidating accounts so you'll have fewer to manage each month.

Opt to have pension payments or monthly retirement account withdrawals automatically deposited into your checking account. Then, set up automatic payments for as many bills as possible to avoid late or missed payments. Simplifying by consolidating accounts and automating tasks can make it easier to stay in control of your finances.

Protect your credit and identity

Stay in control of your personal and financial information by signing up for credit and identity monitoring. A credit monitoring service will constantly monitor your credit reports and alert you to any new activity and changes to your reports. Identity theft monitoring services scour the web for threats to your personal information. You can get both credit and identity monitoring through a service such as Carefull, plus up to $1 million in identity theft insurance.

For even more protection, consider freezing your credit. A credit freeze prevents new loans and line of credit from being taken out in your name if thieves get your personal information. Contact all three credit bureaus—Equifax, Experian and TransUnion—to freeze your credit reports.

[ See: Why You Should Freeze Your Credit Reports ]

Safeguard against scams and fraud

You don’t want to lose your hard-earned savings to scammers, who tend to target retirees because they see them as a source of cash. Smart online habits such as using strong, unique passwords for each account, avoiding clicking on links in emails and text messages from unknown senders, shopping only on familiar websites and being wary of strangers who try to connect through social media can go a long way toward protecting yourself.

Unfortunately, older adults are more likely to be exploited by someone they know, according to the Financial Crimes Enforcement Network. So it’s important to keep a close watch on your accounts and to closely guard your passwords and important financial documents. “Because there are so many threats … you need something that provides a layer of protection, something that puts guardrails around your information,” says David Russell, a wealth manager with Argent Trust and creator of WealthandHonor.com.

A service such as Carefull provides 24/7 account monitoring and alerts you to unusual transactions as well as common money mistakes such as late payments and recurring charitable donations you didn’t intend to make. It also offers a password manager to safely store passwords and a digital vault for important documents. 

[ See: Senior Scams and How to Avoid Them ]

Update legal documents

If you want to have a say in who gets to manage your finances and medical care if you can’t and where your money goes when you die, you need to put your wishes in writing with these legal documents:

  • A will or living trust that spells out who gets your property and assets when you die. A living trust also can be used to protect your money while you’re alive because it lets you name a trustee who can manage your assets if you become unable to yourself.
  • A durable power of attorney document lets you name someone to make financial decisions and transactions for you if you can’t. Make sure the person you name as your POA is someone you trust to manage your finances in your best interest, Lash says.
  • A healthcare power of attorney, also called a healthcare surrogate or healthcare proxy, is someone you name to make medical decisions for you if you can’t. This doesn’t have to be the same person you name as your financial power of attorney.
  • An advance directive or living will stipulates what sort of end-of-life medical care you do or do not want. This should be your decision, not your family's.

Put your final wishes—such as what sort of burial and funeral service you want—in writing so family members don’t have to guess what you want. Russell also recommends having a written plan for what sort of care you would want and where you’re willing to receive that care if you become unable to care for yourself. Most importantly, let family members know where to find these documents because they won’t do anyone any good if no one knows they exist. 

Talk to family about your finances

Don’t think of sharing details about your finances with your adult children or other trusted family members as giving up your independence. It’s a way to ensure they have the information they need to protect your finances if something happens to you. “You plan for retirement,” Lash says. “Why wouldn’t you plan for what might happen with your health and certainly your death?”

Lash recommends creating a list of all of your accounts and account passwords, assets and locations of important documents and items such as estate planning documents, safe deposit boxes and your Social Security card. Tell the people who might have to be involved with your finances as you age and the executor you named in your will or your trustee where this list is (if you don’t want to give it to them right away). 

Russell suggests having a “who does what meeting,” which is something he asks all of his clients to do once they reach 65. Tell your adult children about what your plans are for advanced age, discuss what roles they might have to play, create a plan for incapacity and establish accountability. It’s important to talk before there is a crisis so that you can stay in control of the conversation.

Identify financial advocates

Being independent doesn’t mean being isolated. In fact, social isolation as you age can put your physical and financial well-being at risk. So it’s important to build a social safety net of people who can look out for your best financial interests. 

In addition to naming a power of attorney, you should name trusted contacts on your financial accounts—a person or people your financial institutions can contact if they’re concerned about activity in your accounts and can’t reach you. If you use the Carefull service, you can name trusted contacts who can receive alerts if there is unusual activity on your accounts.

You also need someone you can talk to, such as a financial advisor, about financial decisions you make. Your advisor should do more than just tell you what stocks to buy or sell—the advisor should be a confidant you can count on to help protect your finances, Russell says. You can find fee-only fiduciary advisors near you by using a free service such as Wealthramp, the Garrett Planning Network and the National Association of Personal Financial Advisors.

Bottom line

Staying independent and in control of your finances takes planning. You need to take steps to protect your money and personal information, to let family members know how you want your finances handled if you are unable to yourself and to have financial advocates who can help protect your finances.

[ Keep Reading: Financial Risks That Make It Difficult to Age in Place ]

Cameron Huddleston

Cameron Huddleston

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