Get Organized: How To Improve Your Chances For A Successful Retirement

Get financially organized

One of the biggest hurdles to a successful retirement is financial organization. It’s easy for account statements, legal forms and other important documents to pile up in some hidden away desk or drawer. Before long, things are messy. Not just physically messy, but mentally messy too.

Before you can accurately plan for an awesome retirement, you need to clean this mess up. Having a clear system will help make all of your life easier.  It might take a little effort, but it will save you so much time and energy in the future.

Here’s how to get your finances organized in seven doable steps:

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ONE:  Calculate Your Net Worth

Your net worth is a simple calculation of your total assets minus your total liabilities. It’s important to:

  1. Help you understand your current financial situation.
  2. Provide a reference point for progress towards your goals.
  3. Give your professionals a quick snapshot of your finances.

Calculating your net worth is simple. It’s really just making a list and doing some addition and subtraction.

First, make a list of all your assets, estimate the value of each, and add up the total. You want to include things like:

  1. Money in your bank accounts
  2. The value of investment accounts, including retirement accounts
  3. The fair market value of your home
  4. A realistic value of your cars
  5. The fair market value of any other real estate you own
  6. The cash value of life insurance policies.

Add the estimated value of all these items to find the total of your assets.

Now, make a list of any liabilities – things that you owe. Be sure to include:

  1. Mortgages
  2. Car Loans
  3. Credit Card Balances
  4. Student Loans
  5. Personal Loans
  6. Any other debts.

Add the estimated value of all these items to find the total of your liabilities.

Subtract the amount of your liabilities from your assets to find your total net worth.

Tracking your net worth over time is a great way to evaluate your progress towards your goals.

TWO:  Inventory Your Insurance Coverage

Make a list of all your insurance policies. Write down the company name, policy number, and contact information for the company and/or agent.

Once you’ve listed everything, review your current coverage and cost, and see if it seems to align with your current situation and long-term goals. Make notes of things you want to investigate more. Policies you may want to have include:

  • Health Insurance
  • Auto Insurance
  • Life Insurance
  • Disability Insurance
  • Homeowners or Renter’s Insurance, including flood insurance
  • Umbrella Liability Insurance
  • Long-Term Care Insurance
  • Other vehicle insurance, such as boats or motorcycles
  • Personal Property Insurance, such as jewelry, electronics, or collectibles

It’s overwhelming to decide which insurance you need, how much to cover, and which policy is right for you. Some professional guidance can help. Your financial advisor can help you figure out what insurance you need, and an insurance broker can help you find the right policies.

THREE:  Streamline Your Accounts

Now that you can see what you have, what can you do to simplify? If you have several small retirement accounts, would it make sense to roll them into a single account? Do you have too many bank accounts? What about credit cards? You’ll increase the chances that you can keep track of things by reducing the number of different accounts and the number of account statements accumulating in your physical or virtual mailbox.

The process for consolidating will differ depending on the type of account. Take the time to ensure that you are moving things the right way to minimize tax problems and other administrative hassle. In particular, retirement funds need to be moved using the right process in order to avoid triggering a taxable event. Your accounting advisor, financial advisor, and financial institution should be able to guide you.

FOUR:  Automate and Go Paperless

Take advantage of technology to make life easier. This will require online accounts with your financial institutions. If you don’t already have online account access, or you’ve forgotten your passwords, you’ll need to set up accounts or reset the passwords.

Automating you finances means setting up procedures to manage your money on a day-to-day basis, without you having to do anything. This might include deposits, transfers, payments, and any other transactions. If you’re not sure how to do this, ask your bank or credit union for help.  This you may want to automate include:

Direct deposit: set up pay and other deposits to be put directly into your bank accounts. You can send different deposits to different accounts if that helps you accomplish your goals

Bills: Set up electronic payments for your regular bills. You can set up payment through the company billing you, usually called direct debit or Electronic Funds Transfer (EFT), or through your bank, usually called bill pay or web pay. Your bills will get paid automatically, freeing you to focus on more important issues.

Transfers: If you make the same transfers every month, set them up to happen automatically. You can even transfer between financial institutions.

Sign up for electronic delivery of your financial statements. Instead of receiving paper documents through the U.S. mail, you’ll either have your statements emailed to you, or you’ll receive regular email reminders to log into your online accounts to view your statements and documents. Electronic document delivery is more secure and reduces your risk of being a victim of fraud.

FIVE:  Verify Your Social Security Earnings History

For many people, Social Security is an important form of retirement income.  If your Social Security earnings have been recorded incorrectly, it could make a big difference in your benefit amount. You need to check for errors now, because the Social Security Administration imposes time limits on correcting your earnings record.

Your Social Security benefit is calculated using the highest 35 years of earnings, so missing wages will probably lower your benefit amount. One year of missing earnings can make a difference of $100 per month (or more!) in your benefit amount. Over your lifetime, that could be nearly $30,000 in missed benefits from one year of missing earnings.

To verify your earnings record, check your Social Security statement. If you’re younger than 60, you only get these by mail every 5 years. For those over 60, you get one by mail every year. If you don’t have a recent statement, don’t let that stop you. Go online and instantly print your most recent statement. You’ll need to create a My Social Security account by visiting You’ll need to provide a Social Security number, mailing address and a valid e-mail address. You’ll also need to be able to answer questions that only you are likely to know, and your information needs to match the information on file with Social Security.

If there is a mistake, the burden  to prove it is yours. You’ll need to locate documents that prove the error such as tax forms, W-2 forms or pay stubs. If you can’t find these, Social Security says to write down the name and address of your employer, the dates you worked there, how much you earned and the name and Social Security number you were using while you were employed, and the agency will use this information to investigate the problem.

Most of us don’t keep our pay stubs or other documents forever, so it is smart to check your Social Security statement regularly and fix errors as they happen.

SIX:  Make A Retirement Budget

When I meet with a new client, I start with a little small talk and then gather some information. About halfway through my questions, I ask, “How much after tax income would you need if you retired today?”

Surprisingly often, the answer is, “I don’t really know.”

If you are getting ready for retirement, this is one of the most important things to know. A good financial planner can help you work through this number, but remember…you need to be the one in charge of your future.

If you are not sure how much income you’ll want to receive in retirement, you should figure out. Creating a retirement budget is a good way to estimate how much money you’ll need in retirement.

First, figure out where you are currently spending your money. You may already track this, or you may have to do some researching by looking at the last year’s bank statements, credit card bills, and tax returns. Be sure to include non-monthly expenses such as car registration, Christmas gifts, property taxes, homeowners association dues, club memberships, etc.

Second, account for changing health care costs. If your employer is contributing to your premiums now, you may have to pay a larger share after retirement. Unsubsidized health insurance can be very expensive. Shop for plans now so you can add an estimate of that monthly expense into your budget. Be sure to include dental, vision, and hearing costs.

Third, think about how your lifestyle will change. You may suddenly have more time for an expensive hobby, or you may be able take on some household tasks that you’ve been paying someone else to do. There are likely to be several work-related expenses that go down when you retire, including commuting costs, work clothes, or meals purchased away from home.

Fourth, add up your projected retirement income. This may include pension payments, Social Security benefits, distributions from retirement accounts, other investment income, or part-time work.

If you have the time, try to live on your post-retirement budget for six months or a year before your retirement date. You may be able to make some adjustments based upon the information you learn.

SEVEN:  Create a Master File

Now that you have all your paperwork together, wills prepared, and everything else organized, put this information together in a way that is simple and accessible. This contains a lot of personal information, so it needs to be kept somewhere safe, such as a locked file drawer or a safe deposit box. Share its location and access information with whichever friends or family will be handling your affairs if something happens to you.

If your folder contains a lot of information, you may want to make a quick summary sheet or index to highlight the important parts.

This that you will want to include:

  • Will
  • Advance Health Care Directive
  • Powers of Attorney
  • Trust documents
  • Information about insurance policies
  • Birth certificates
  • Marriage certificates
  • Citizenship papers
  • Divorce/separation papers
  • Adoption papers
  • Social security numbers/cards
  • Passport information (photocopy of the main page)
  • Driver’s licenses (photocopy)
  • Military records
  • Health insurance information
  • Medicare/Medicaid numbers
  • Passwords for digital information
  • Income sources, including Social Security, retirement and/or disability benefits, pensions, etc.
  • Financial information, such as the name of the company, account numbers, and address/telephone, for bank accounts, investment accounts, life insurance, annuities, etc.
  • Information about real estate, including location of documents, mortgages, etc.
  • Information about other assets, including location of titles, such as cars
  • The location of any valuables that are hidden
  • List of liabilities, including credit cards, loans, mortgages, etc.
  • Anything else you might need

You can upload copies of all these documents to internet-based storage, such as Dropbox or Google Drive. They will be protect from damage and available for your key friends or family to view when necessary. Be sure to share the files or instructions with whomever may be assisting you.

Once you’ve tackled these tasks, you’ll know exactly where you stand and know what type of help you need to move forward.  You can prepare a list of things that you need to do, and you’ll be able to tell your advisory team what sort of help you need.  You’ll also be a lot better prepared to handle the day-to-day management of your finances without a lot of stress or frustration.  Take a little time today to start working on this process, and schedule the time to complete it within a few weeks.  Getting your finances organized is a small job with big benefits.

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