Even if it was motivated by income, the move toward stocks also addresses the need for retirees to think about long-term growth. Consumer stocks The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and The Procter & Gamble Company (NYSE:PG) all yield more in dividends than their bonds pay in interest, but even more important, they also have long histories of dividend increases and share-price appreciation that will help your income grow while also boosting your retirement nest egg for the later years of retirement.
Idea 3: Time your retirement account withdrawals correctly.
Tax-favored accounts like IRAs and 401(k)s are immensely helpful in building up retirement savings. But they create a challenge in retirement, because they increase your taxable income and can have tax consequences for Social Security and other income.
As you pull money out of your retirement accounts, consult with your accountant or simply pay attention to the tax impact of your withdrawals. That way, you’ll get the most out of the money you’ve squirreled away over the decades.
Idea 4: Consider cheaper housing.
Even after the housing bust, most retirees have a huge part of their wealth locked up in their homes. Complicated strategies like reverse mortgages can help seniors get at some of their home equity, but they avoid the fundamental question of whether you actually need to keep the family home after children have grown up and moved away.
Moving down to cheaper housing can be an excellent way to free up money for other needs. With the housing market rebounding, a trade-down doesn’t have to be a money-loser if you’re patient.
Idea 5: Check your estate planning.
No one wants to contemplate their own mortality, but if you haven’t taken care of basic estate planning by the time you retire, you shouldn’t delay any further. Having basic documents like a will and durable powers of attorney to let trusted friends or family members handle your finances if something happens to you are crucial to ensure smooth transitions as you age.
Stay tuned
Be sure to check back later in the week for more advice for investors of all ages. Coming tomorrow: dealing with finances in your final working years.
Tune in every Monday and Wednesday for Dan’s columns on retirement, investing, and personal finance. You can follow him on Twitter @DanCaplinger.
The article 5 Smart Money Moves for Retirees originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola, Johnson & Johnson, and Procter & Gamble. The Motley Fool owns shares of Johnson & Johnson.
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