Retirement is a great time for freedom for most Americans since you no longer have to spend your days earning a living.

But while you are free to indulge in your hobbies and decide how to spend your days, you still have to be smart about your financial decisions and guarantee that you use good habits.

To help guard your financial security during your retirement years, here are three habits to stick to before leaving your job.

1. Living within a budget

Careful budgeting is very important for retirees to guarantee they can meet their core expenses. That is especially true since most seniors get a fixed monthly income and have high costs for their medical services.

A budget allows retirees to use their dollars on stuff that matters the most, while also ensuring they do not run low and end up going into debt or withdrawing too much money out of their retirement accounts.

Budgeting also allows them to spend better so they can enjoy their new freedom. For some retirees, having the funds to travel or spoil the grandchildren is very crucial. A budget allows them to find cuts they can make to free up funds for this reason.

2. Living within your means

Retirees usually get a set amount of money from Social Security and the rest comes from savings.

To preserve this nest egg, seniors should ensure they get a safe withdrawal rate and do not take too much from their investment accounts too fast. One way is to follow the 4% rule and only take out 4% of their retirement account balance this first year, adjusting upwards for incoming inflation in the coming years.

Retirees need to ensure they are not spending more than they can afford while keeping a safe withdrawal rate. That means living inside their means.

3. Rebalancing your investment portfolio every year

Finally, seniors should also get into the habit of routinely looking over their investment portfolios to guarantee they have a good mix of assets.

Over time, your portfolio might become too heavily linked to one particular kind of asset or in a specific sector. When this happens, you might be exposed to too much risk. This could be dangerous for any one investor, but especially for those getting close to retirement who might not have the time to recover from these losses or wait for the stock market to come back after a crash.

Author: Steven Sinclaire

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