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Retirement Ready: How to Adjust Your Financial Plan Post-Retirement

Transitioning into retirement is a significant shift that calls for a re-evaluation of one’s financial landscape. The diligent years of saving and investing give way to a period where the focus is on the management and utilization of these funds. Here, we’ll unpack strategies for seniors to reassess their financial plans post-retirement, with particular attention to the potential role of life settlements as a part of their financial toolkit.

Revisiting Your Retirement Plan

Your post-retirement financial plan is the roadmap for your golden years. Begin by reassessing your retirement goals. What seemed like priorities at 40 may shift considerably by 65 or 70. Perhaps travel is less appealing, and time with family, more so. It’s also essential to evaluate your risk tolerance now that your regular income has ceased. The strategy of shifting from growth-oriented investments to more conservative, income-producing assets may be apt.

Managing Living Expenses with a Fixed Income

With paychecks in the rearview, a fixed retirement income necessitates a new budgeting strategy. Start by listing all income sources — pensions, government benefits, rental incomes, annuities. Then, document all expenses, categorizing them into essentials, discretionary, and one-offs for clarity. Tools like online budget trackers can help you monitor cash flow and adjust accordingly.

Healthcare Considerations and Costs

Healthcare can become a central expense in retirement. Beyond the Canadian Medicare system, consider supplemental insurance plans for services not covered, like certain medications, dental care, or private rooms in hospitals. Additionally, setting aside a ‘healthcare emergency fund’ could buffer against unforeseen medical expenses that could otherwise derail your financial plan.

The Role and Intricacies of Life Settlements

A life insurance policy is often seen as protection during your working years, but its role can evolve. If the policy’s original purpose is no longer relevant — say your dependents are now financially independent — a life settlement offers a way to liquidate this asset. It involves selling your policy to a third party for immediate funds, often greater than the cash surrender value but less than the death benefit. This lump sum can be pivotal in covering increased living or medical costs or even in fulfilling a lifelong dream, such as funding a grandchild’s education or a significant charitable contribution.

Real-World Example: The Life Settlement Decision

Consider Martin, a widower whose children are well-established. He holds a life insurance policy with a death benefit of $500,000 and a cash surrender value of $200,000. A life settlement offers him $300,000. By choosing a life settlement, Martin could use the funds to cover his living expenses and invest a portion into a conservative mutual fund that provides regular dividends, thus enhancing his income stream.

Adjusting for Inflation

Inflation can silently diminish the value of your savings. Incorporating investments that historically outpace inflation, such as certain types of bonds or dividend-paying stocks, might be advisable. Review these annually to ensure they still meet your financial needs and adjust as necessary.

Estate Planning and Philanthropy

Retirement is also an opportune time to consider the legacy you wish to leave. This may mean structuring your estate to minimize taxes or setting up a charitable fund. Life settlements can offer the liquidity needed to see these plans to fruition. For instance, the proceeds from a life settlement can be channeled into a donor-advised fund, allowing you to support charitable causes while also receiving tax deductions.

The transition into retirement should be met with a proactive reassessment of your financial strategy. It’s a time to align your investments with your current life stage, explore new financial tools such as life settlements, and ensure your spending plans take into account the reality of a fixed income and potential healthcare costs. With thoughtful planning and periodic review, you can enjoy a financially secure retirement that reflects the life you’ve worked hard to build.

Are you considering a life settlement for your life insurance policy? Wondering if you’re eligible to sell your life insurance policy? Learn more about selling your policy and find out if you qualify for a life settlement by contacting the experts at Canadian Life Settlements today.

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