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The Boston Globe

Business

7 financial resolutions retirees should make

When it comes to money, resolutions may be important for retirees living on fixed incomes. Here’s a look at seven worthy resolutions:

1. Get disciplined about money. Stick to a budget. Being thrifty without a plan only goes so far when unexpected expenses arise. It’s also wise to record your financial goals and plans.

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2. Attack your debt. New retirees are prone to running up debt with their newfound freedom. Paying off credit card debt should be a top priority. After the debt is zeroed out, use only one card and pay the balance monthly. If an emergency expense leads to a balance, don’t let it linger.

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.

3. Invest in dividend-paying stocks. 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 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. The average dividend stock yielded 2.8 percent in 2011, and investors can better that with such blue chips as General Electric Co., at 3.8 percent.

4. Update your estate plan. Tax laws change and documents may be out of date.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 your plans are current. If you need help finding a financial planner, check the website of the National Association of Personal Financial Advisors. A basic estate plan includes a will, living will, durable power of attorney, and health care proxy.

5. Be more generous. Resolve to be more charitable, giving to worthy causes as well as to your loved ones. It’s rewarding and makes tax and financial sense. Remember that you can give gifts of up to $13,000 annually without triggering taxes.

6. Check into long-term care insurance. It may already be too expensive if you have health issues. But note that roughly a fifth of those who sign up for coverage do so at age 65 or older. About 70 percent of people over 65 will require long-term care. And neither private health insurance nor Medicare pay for the majority of the services people need - help with personal care such as dressing. That can be a devastating financial burden without coverage. A typical policy costs upward of $4,000 per year for a 65-year-old couple. By 70, for those able to qualify, that more than doubles. So don’t delay.

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 and stay sharp.

Dave Carpenter writes for the Associated Press.
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