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Retirees are still vulnerable to the vicissitudes of life from theft to disaster.
Protecting their wealth and using it to generate a viable source of income takes more than simply "set it and forget it" by putting the money in annuities, bonds or dividend-paying stocks.
Life expectancy has increased to the point where retirees can reasonably expect to live another 20 to 30 years after they retire.
Saving money in retirement is just as important as saving money while in the workforce.
Here are some tips on how to save money while enjoying the golden years.
Budgeting Spending is critically important during retirement because the retiree does not have a stable source of income outside of his investments, Social Security or pension payments.
While these may be substantial, the retiree must err on the side of caution and carefully plan his spending habits ahead of time.
Variable expenses like food, utilities, gasoline and other consumer staples cannot be planned for, but money can be set aside in anticipation of them.
Taking inflation into account can help the retiree save enough money to take care of variable costs.
Part-Time Work Retirees that miss working can get a part-time job to supplement their retirement income.
Current income earned from a job is money not coming out of retirement accounts like a 401(k) or Individual Retirement Account (IRA).
The retiree is still saving money for the future, which may stretch out ahead of them for sometime, considering increased life expectancy.
Tax-Efficient Investments Retirees need investments that will provide sustainable growth while avoiding the tax man.
This often dictates that a retiree keeps bonds inside their retirement account and stocks outside.
Bonds are primarily income investments which provide the retiree with plenty of taxable income.
Keeping them inside the account preserves their income while avoiding the tax man.
If choosing a mutual fund, the retiree must read the fine print.
Not all funds are equal in the eyes of the Internal Revenue Service.
Take Another Look At Life Insurance Life insurance is meant to provide income to dependents and beneficiaries if the policyholder dies.
A retiree often does not need life insurance because his children are likely grown up and earning their own incomes.
Additionally, the retiree is usually not drawing his own income unless he works part-time.
The income from a part-time job, however, may not be enough to justify the expense of life insurance.
Retirees must consider whether they truly need their policies.
If not, cancel them and save the premiums.
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