The Center For Debt Management
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Money Tips After You Retire:
Managing Your Expenses on a Fixed or Reduced Income

Once you've retired, you finally have the opportunity to work at your dream job — keeping yourself happy. It's your chance to visit places you've always wanted to see, take up a new hobby and spend more time with your family and friends. But to be successful at this new position, you've got to make the most of your income and investments. Here are suggestions.

Make it easy to manage your money and pay the bills. One way is to have your Social Security benefits, pension payments and other income automatically deposited into your bank account each month. "Direct deposit isn't just safe and reliable — it also ensures that you don't need to schedule your activities around a visit to the bank just to deposit your funds," said Susan Boenau, Chief of the FDIC's Consumer Affairs Section.

Banks also offer quick and easy money-management and bill-paying services by telephone or online by computer, usually for free or at low cost. With telephone banking, you can monitor your account balance, find out if checks or deposits have cleared, or transfer money between accounts at the same bank. If you have a personal computer with Internet access, you can do your banking and bill paying online 24 hours a day, seven days a week. Be sure you know about any fees.

Look for banking services geared to older consumers. Find out if your bank has special accounts, clubs, discounts, events, publications or other services for senior citizens, sometimes including people as young as 50. Comparison shop among several banks to get the best package of services to meet your needs.

Consider a second career or working part-time. "Working longer, even part-time, can allow you to increase your savings and may boost your retirement income," added Boenau. "That alone could also enable you to delay or reduce withdrawals from your savings to cover living expenses."

But if you already are collecting Social Security benefits, find out if income from a job could reduce what you are entitled to collect from the government. Likewise, understand if going back to work could reduce any benefits from an employer's retirement or pension plan.

Be careful with credit cards. You'll probably find that credit cards in retirement are just as necessary as they were when you were younger. But be cautious with your credit cards. If you carry a large balance, you'll pay a lot of money in interest charges for a long time. If you have many accounts and get too deep in debt, your credit record could be damaged, which means you would have a tougher time getting the best deal the next time you apply for a loan, insurance or an apartment.

Another problem with having numerous credit cards is that if you're not closely monitoring your accounts, you can forget to send a payment (and incur late fees and additional finance charges) or you may not notice if a thief has stolen one of your cards and made purchases with it.

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