Top 3 Financial Tips for the Unwealthy

Financial expert, retired executive of a Fortune 500 technology company and the author the of the blog, The Retirement Café, Dirk Cotton, chimes in on tips for the people who are unable to hire a financial expert.

Preparing for retirement can be challenging if you feel you can barely ‘make ends meet’ financially each month. Nearly one-half of Americans live paycheck to paycheck, according to a recent report by CareerBuilder, which credit card debt and employment struggles among the top reasons for financial trouble. Here are some solid personal finance tips to help you strategically plan for a successful retirement and financial future:

Top Financial Tips to Help You Plan for Your Future

If you are a retiree who doesn’t know anything about finance and are unable to hire a financial expert to help, there are a few ways you can increase your retirement nest egg. If nothing else, these tactics, in addition to living below your means and saving strategically, can help you achieve a more comfortable retirement.

1. Postpone Your Social Security Benefits

If you are able to, this is the cheapest and easiest way to make your money last longer and even make you more money. Social Security retirement benefits can be claimed at any age between 62 and 70, with delayed claiming resulting in larger monthly payments.

2. Base Annual Spending on Your Required Minimum Distribution (RMD)

You generally have to start taking withdrawals from your IRA, SIMPLE IRA, SEP IRA, or retirement plan account when you reach age 70. Your required minimum distribution is the minimum amount you must withdraw from your account each year. There is no magic number or percentage you can spend throughout retirement because there are so many variables. Review your finances yearly and review your RMD to determine what you should allocate for spending.

3. Have a Floor of Secure Income

Expenses and life can be so unpredictable. An income floor is the lowest amount of income that is needed to meet your basic needs no matter what happens. Having income from pensions, savings and annuities can help provide security and stability so that you’re not using credit cards, accumulating negative interest or building debt.

Rational and Critical Thinking Are Crucial In Financial Planning

If you take the three financial tips actions Cotton recommends above, that’s a big step toward a more secure financial future. Setting a budget and making the most of your retirement investments to time retirement and RMDs will help you enjoy a bright financial future and a retirement that helps give you peace of mind.

About Dirk Cotton

Dirk Cotton is a retired executive of a Fortune 500 technology company. Since retiring in 2005, he has researched and published papers on retirement finance, spoken at retirement industry conferences and events, and regularly posted on retirement finance issues at his blog, The Retirement Café. He is currently a Thought Leader at APViewpoint, Advisor Perspectives’ online community of investment advisors and financial planners.

Dirk’s background and interests in both tech and finance allows him to bring a fresh and unique perspective to retirement income planning that involves rational and critical thinking. It is important to separate confidence and beliefs. For example, people believe you can time the stock market but, realistically, this is not the case. Being data driven mathematically and statistically is important; but you have to also be rational and aware of data implications.