1. Update Your Financial Goals

As you transition into retirement, your financial goals will likely change. You may want to:

• Travel more
• Move to a different home
• Retire abroad
• Take up new hobbies
• Provide financial support to your children or grandchildren

Start by clarifying your financial goals and estimating the costs associated with each. A financial advisor can help you create a plan to draw on your nest egg efficiently and minimize your tax burden.

2. Clarify Your Costs

Understanding your expenses is crucial, especially if you’re on a fixed income. Consider both essential costs (rent, mortgage, utilities, food, debt payments) and discretionary spending (eating out, shopping, traveling). Factor in any financial goals and potential increases in housing and medical costs.

3. Plan for Health Care Expenses

Health care costs can be significant in retirement. According to Fidelity Investments, a 65-year-old retired couple may need roughly $315,000 for health care expenses. Medicare doesn’t cover everything, so plan for premiums, deductibles, copays, and long-term care if needed. A health savings account (HSA) can help cover qualified medical expenses tax-free.

4. Manage Your Budget

Budgeting is essential, especially on a fixed income. List all income sources, such as 401(k)s, IRAs, pensions, Social Security benefits, annuities, and passive income. Be strategic about drawing on your savings to avoid a significant tax bill. Look for senior discounts and use budgeting apps to live within your means.

5. Don’t Forget About Taxes

Withdrawals from tax-deferred retirement accounts are considered taxable income and can trigger a substantial tax liability. Diversify your income by combining funds from tax-deferred and Roth accounts. Remember to start taking required minimum distributions (RMDs) from tax-deferred accounts at age 73.

Take advantage of tax perks for seniors, such as an additional standard deduction, Social Security tax exemption, and elderly tax credit.

6. Update Your Estate Plan

Estate planning involves organizing your assets and making a plan for their distribution. Update your will, choose powers of attorney, and establish trusts to help your loved ones avoid probate and distribute assets during your lifetime if desired.

7. Avoid Scams That Target Seniors

Seniors are often targeted by scammers, with average losses over $33,900. Protect yourself by never sharing personal information with unsolicited contacts, using multifactor authentication, and consulting with friends or family if you’re suspicious. Report fraud to the Federal Trade Commission (FTC) and consider identity theft protection services.