7 Resolutions for Retirees in 2012

retirement resolutionsRetirees may be past the days of resolving to work out more or buy fewer $4 coffees. Yet when it comes to money in particular, resolutions may be even more important for those living on fixed income.

From financial nuts and bolts to more holistic aims, here's a look at seven worthy resolutions for retirees to commit to in 2012:

1. Get disciplined about money matters.

Retirees should set up a formal budget and stick to it. Being thrifty without a plan only goes so far when unexpected expenses arise, especially at an age when health care costs can start to mount.

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.

The average dividend stock yielded 2.8 percent in 2011, and investors can better that with such blue chips as General Electric Co., 3.8 percent, or Pfizer Inc., 4.7 percent. Other good options include dividend-heavy mutual fund T. Rowe Price Equity Income (PRFDX), which gets a gold-medal rating from Morningstar, and exchange-traded fund Vanguard Dividend Appreciation (VIG), which carries a five-star rating.

4. Get your estate plan in order.

Make sure your estate plan and financial documents are updated. Tax laws change and documents may be out of date. Beneficiaries may need to be revised.

Set up a review with an attorney and investment adviser to make sure all of your plans are current. If you need help finding a financial planner near you, check the website of the National Association of Personal Financial Advisors, http://findanadvisor.napfa.org/Home.aspx .

A basic estate plan includes a will, living will, durable power of attorney and health-care proxy or living will.

5. Be more generous.

Resolve to be more charitable, giving to worthy causes for others as well as your loved ones. It's rewarding and makes tax and financial sense too.

Remember that you can give gifts of up to $13,000 annually without triggering taxes. Helping a younger family member can also set an admirable precedent that reinforces the importance of charitable giving.

You may want to consider a charitable gift annuity, in which you donate to a large charity and receive regular lifetime payments in return.

"In times of very low interest rates and declining returns on assets, this is a good way for retirees to increase their cash flow and get an income tax deduction while helping a charity," says Michael Dribin, a trusts and estates attorney for Harper Meyer in Miami.

6. Check into long-term care insurance possibilities.

Consider getting a long-term care policy. It may already be too expensive if you have health issues or are well into retirement. But note that roughly a fifth of those who sign up for coverage do so at age 65 or older, according to the American Association for Long-Term Care Insurance.

About 70 percent of people over 65 will require long-term care services at some point. And neither private health insurance nor Medicare pay for the majority of the services people need -- help with personal care such as dressing or using the bathroom independently. That can be a devastating financial burden without coverage. An assisted living facility costs an average of $38,280 per year, a semi-private room in a nursing room runs $73,000 and home health aides charge $19 to $21 an hour, according to the insurance association.

A typical long-term care policy costs upwards of $4,000 per year for a 65-year-old couple. By 70, for those still able to qualify, that more than doubles. So don't delay on this one.

7. Stretch your body and mind.

Choose daily pursuits that keep you physically, mentally and socially engaged.

There's abundant evidence that continued physical activity helps people live longer, feel better, avoid depression and keep their mental skills sharp.

"Functional disabilities shouldn't keep you from exercising," says Dr. Amy Ehrlich, a geriatrician with Montefiore Medical Center in the Bronx, N.Y,

She puts frail elderly patients on a walking program. If they can't walk, she puts them on a swimming program. And if they can't swim, she has them take a water aerobics class.

Studies show that people benefit from efforts to stay cognitively sharp - from doing a daily crossword to playing games to reading. Maintaining social ties also is critical. Older people who volunteer in schools, for example, feel happier, more useful and more satisfied with their lives.


Personal Finance Writer Dave Carpenter can be reached at http://twitter.com/scribblerdave.

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August 01 2012 at 3:12 PM Report abuse rate up rate down Reply

The only problem with this excellent, clear and attainable advice, is that many will not heed it. However, having retired just 2 years ago, I can say that having following the steps above has greatly enhanced my retirement experience. As the Nike ad says...JUST DO IT! You'll be so glad you did.

January 12 2012 at 2:40 PM Report abuse rate up rate down Reply

good advice

January 09 2012 at 8:23 PM Report abuse rate up rate down Reply

Now, at the Begining of 2012, Food Prices have Gone SKY HIGH! YET - American Senior Citizens - Received - a - 3.6% Social Security COLA. The MULTIMILLIONAIRE - Members Of CONGRESS - Gave Themselves A THIRTY-SIX -THOUSAND - DOLLAR - PER - YEAR - COLA - IN - Years - 2010 & 2011! Health Insurance - Has - Gone - UP - Prescription - Insurance - Has - Gone - Up - & - On - & - On! How can American Senior Citizens Be Expected To Live - Much Less Save - When the cost of everything has gone up?

January 09 2012 at 2:39 PM Report abuse rate up rate down Reply

Swiftcap is alleedly owned by the Govt and will invest in companies expecting to make a 10% return-it may be worth looking at although it does seem as Govt is again delving into the private sector!
The contact info I got in an e mail was

Micheal Walls, CEO
Swift Capital Finance
409 Silverside Rd, Suite 100
Wilmington, DE 19809
website: www.swiftcapital.com
Direct line: (+1)940-560-8429

January 09 2012 at 8:29 AM Report abuse rate up rate down Reply

These feel good articles are nice. However, very shortly into the future, health care will be available only to the rich and to the fully employeed. And without the availability of health care, nothing else matters.

America has made it clear that this is fine, that 50 million Americans currently without health care is the way it should be. As the 50 million turns into 100 million, I suppose those with health care will still say they don't care.

January 08 2012 at 7:44 AM Report abuse rate up rate down Reply

You missed Must vote Obama out of Office to save America

January 07 2012 at 10:49 AM Report abuse +1 rate up rate down Reply


January 07 2012 at 10:16 AM Report abuse +2 rate up rate down Reply

You will need 2 million dollars by the time you are 65 to maintain your middleclass lifestyle!!!!! assuming you live a long life. However the average life expectency is 76 for men and 78 for women as of right now

January 06 2012 at 3:33 PM Report abuse rate up rate down Reply
1 reply to SPQR's comment

True, for the typical investment portfolio. It can be done with less in some non-typical plans, and the income generated keeps up or exceeds inflation (not a fixed income)

January 06 2012 at 9:07 PM Report abuse rate up rate down Reply

This would be a good article if the lead was "What you should do 10 years before your planned retirement". If folks have not gotten in to these points in others way before it is gold watch time, it is probably too late.

January 06 2012 at 3:28 PM Report abuse rate up rate down Reply