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Financial Checkup for Retirees

This page reproduces all of the information from the workshop handout for Financial Checkup for Retirees. Most importantly, it has clickable links to all of the resources mentioned during the workshop.

Financial Checkup is a series of checklists, each on a different financial topic. The goals of Financial Checkup are to help you:

  • Simplify your finances.
  • Plan for the future.
  • Protect yourself and your money from scams.
  • Organize important information so that it’s easily accessible for you and your representatives.
  • Select and prioritize financial tasks to create your personal To Do list.

How to Use the Checklists

The information is organized into 11 checklists that cover broad tasks or strategies. This is not a prioritized list; you will decide which items are important for you to do. Make this handout your plan of action by marking each item on the list with one of the following:

X – Strike out items that are not relevant for you.

Checkmark –  Check tasks you have already done and that are still current.

* Star the ones you need to do now.

⇒ Forward things you need to do, but that aren’t a top priority. Put it on your calendar so you don’t forget.

If you’re married, please do these tasks together so that the spouse who has been less involved in managing the couple’s finances becomes more familiar.

1. Simplify your finances. Make money management easier for you and your representatives.

  • Automate
    • Set up direct deposit for regular income payments.
    • Set up auto-debit for monthly bills.
    • Set up Required Minimum Distributions (RMDs) from retirement accounts to be withdrawn and deposited automatically into your checking or savings account.
    • Use automatic rebalancing in your retirement account, if available. See Karen’s blog post about Automatic Rebalancing.
  • Streamline
    • Reduce the number of accounts: checking and savings, credit cards, and investment or brokerage accounts.
      • Fewer accounts will make it easier to maintain minimum balances for bank accounts, detect suspicious transactions on credit cards, and take RMDs.
      • Cautions:
    • Combine retirement accounts using only direct transfers.
      • Direct transfers go directly from Custodian #1 to Custodian #2. You never have control of the money. This includes direct rollovers (from employer plans) and trustee-to-trustee transfers (from IRAs). You may receive a 1099, but the taxable amount will be $0 because it was rolled over.
      • Cautions
        • You must take your RMD before doing the rollover, unless the transfer is between IRAs.
        • Indirect rollovers from an IRA, where you receive a check made out to you or the money is deposited into your personal account, are limited to one per 12-month period and must be completed in 90 days. Taxes will be withheld, even though there may not be any taxable income. To avoid tax on the withheld amount, you must re-deposit the full amount of the distribution – replacing the withheld amount with money from some other source.
    • Choose investments that require little monitoring.
    • Reduce the number of different investments you own.
      • Example: Choose funds that cover broader categories, i.e. a Total US Stock Index Fund instead of large, mid, and small cap US stock index funds.

2. Make a spending plan for right now. Make a 2nd one for “What if?”

  • Base your plan on past spending patterns. Track your expenses for 1 to 3 months, or review checking and credit card statements from the past month or two to re-create an estimate of expenses. Record and total the expenses by category. For example, use Karen’s monthly expenses worksheet that you can download at https://bit.ly/PastMonthExp .
    • Add non-monthly expenses (both planned and unplanned) such as property taxes, vacation, medical procedures, car repair, gifts, memberships, and home repair and maintenance.
    • Create a plan based on those past spending records. Use pen and paper, an Excel template, or look for sample forms online. The US Dept. of Labor’s Savings Fitness book has an interactive spending plan tool. Go to http://bit.ly/Savings_Fitness_Worksheets.
  • Think about how your life – and your expenses – could change in the future. Create a second spending plan for that “what if” scenario. Examples:
    • Moving to an apartment, a different state, or into assisted living or nursing care.
    • New expenses for help with housekeeping, meal prep, yard care, or driving.
    • Divorce or marriage.
    • Death of spouse. Here are some ways your income and expenses might change:
      • Some expenses, such as property taxes, cable/phone/internet, won’t change. Others may decrease, but probably by less than half.
      • Your income tax rate may increase.
      • If both spouses were receiving Social Security, you will continue to receive the larger of the two benefits. The smaller benefit will end.
      • If the deceased was receiving a pension or annuity payment, whether you will receive a payment, and how much it will be, depends on the choices made by the deceased when the payments began.

3. Estimate how long your savings and investments will last.

  • If your guaranteed monthly income from Social Security, pensions, or annuities doesn’t cover your expenses, you will need to take money from your savings and investments. How long will your savings last?
    • Add up the value of your savings and investments, including retirement accounts.
      • Don’t count the value of your home or other personal property such as your car or jewelry.
      • List these assets on a sheet of paper, on a spreadsheet app, or in the Assets section of a Net Worth form. Examples of Net Worth forms:

4. Reduce expenses if your monthly expenses exceed your income, you’re at risk of running out of money during your lifetime, or you simply want to be more cautious with your finances.

  • Track your expenses. For the first month, compare your actual spending with your spending plan at the end of each week to identify problem areas and start making changes right away.
  • Try to reduce expenses in areas where your daily choices make a big difference, such as groceries, entertainment, and clothing. For example, let’s look at groceries. Try some of these ideas if you aren’t doing them already:
    • Sign up for loyalty programs at the groceries where you frequently shop. Download the app to your phone.
    • Read weekly ads. Plan your meals around items that are on sale. Some sale prices require you to load that coupon in the store’s app, and enter your phone number or loyalty number at checkout.
    • Make a list. Organize it to match the store layout. For example, list produce first, then canned goods and packaged products, followed by fresh meats, and then frozen foods and dairy.
    • Shop when you aren’t rushed and when the store isn’t crowded so you can take the time to compare prices of different brands, sizes, or alternate products.
    • Follow your list through the store; skip aisles where you don’t need to shop.
    • Did you pick up any items that weren’t on your list? At checkout, it’s OK to hand an item to the cashier and say you’ve changed your mind and no longer want it.
  • Look for suggestions from reliable sources about how to reduce other expenses. For starters, try this list from Consumer Reports https://bit.ly/CRSaveMoney

5. Stretch your income by using government or community resources. Some programs have income or asset limitations. 

    • BenefitsCheckUp, operated by the National Council on Aging, asks you lots of personal questions to check your eligibility for various federal, state, and private benefits and services. This can be an efficient way to find services for which you actually qualify. Go to https://www.benefitscheckup.org/
    • Eldercare Locator is a service administered by the National Association of Area Agencies on Aging (n4a). It can connect you with help in your neighborhood.
      • Call 1 (800) 677-1116 or search using your zip code at https://eldercare.acl.gov/
      • Search results typically include your Area Agency on Aging, SHIP (health insurance counseling), legal services, and a long-term care ombudsman.
      • You will need to inquire to determine your eligibility for these individual services.
    • The Illinois Department on Aging website can also direct you to local services. You may get a more complete list of services here than from Eldercare Locator.
      • On the state map at https://bit.ly/ILAgingServices, click on your county for a list of service providers and services. For many services, it will instruct you to contact your AAA (Area Agency on Aging). That contact information is listed higher up on the page. You can also call 800-256-8966.
      • Some services are income based, others – such as congregant meals – are not.
  • Calling 211 in many Illinois counties will connect you with a non-profit agency providing confidential information & referral to services such as help with health issues, housing & utilities, food, crisis, emergencies and disasters. You may also be able to get information about assistance with prescription costs, transportation, adult day care, community meals, respite care, home health care, and homemaker services.
  • Government assistance programs help lower-income households of all ages with certain expenses. Go to https://bit.ly/GovtAssistance_Chan for links for help with food expenses (SNAP), gas or electric bills (LIHEAP), Medicaid, and discounts on telephone services.
  • Senior Health Insurance Program (SHIP) is a free statewide health insurance counseling service for Medicare beneficiaries and their caregivers. Counselors can answer questions about Medicare and long-term care insurance, help you file claims with Medicare and Medicare Supplement policies, and analyze Medicare Supplement and long term care insurance policies. Go to https://www2.illinois.gov/aging/ship/ or call (800) 252-8966. Check the county-by-county list to see which agencies near you have a SHIP counselor. See https://bit.ly/SHIP_list.
  • Free tax preparation is provided through two programs authorized by the IRS:
    • VITA for people with income $55,000 or less, or disabled.
    • Tax Counseling for the Elderly which serves all taxpayers, but especially those aged 60 and older. Find sites at https://irs.treasury.gov/freetaxprep/

6. Plan for future housing and care needs.  

  • If you own your home, assess its current condition and costs for maintenance, repair, or remodeling.
    • What maintenance is needed now? In the next 3 years?
    • How old are appliances, furnace and air conditioner, roof, water heater, etc.?
    • What would it cost to make your house marketable, such as painting, new carpet, repairs, etc.?
  • Evaluate alternate housing solutions for the future.
    • Aging in place: What changes would make your home safer as you age and allow you to stay in your home longer?
      • Install lever-style door handles, anti-scald faucets, bathroom grab bars, and D-handles on cabinets and drawers instead of knobs.
      • Remodel to widen doorways, replace a tub with a walk-in shower, or build a ramp at the entrance.
      • Remodel or add on to create 1st floor bathroom and bedroom.
      • Look into the cost of in-home care.
      • To learn more: National Association of Home Builders remodeling checklist https://bit.ly/NASBchecklist and United Disabilities Services https://bit.ly/AgingDesign.
    • Moving: Would moving to a smaller home, a less expensive area, or to an apartment cost less? Be easier to manage?
    • Assisted living, nursing care facility, or CCRC (Continuing Care Retirement Community)
      • Visit facilities to learn about their services, fees, and entry requirements before you need them. Discuss your impressions and preferences with your family.
    • Plan how you will pay for the costs of housing and care.
      • Do you have sufficient savings and investments to cover the costs? In Illinois, the median annual cost of assisted living in  2023 was $62,700. Nursing home care was $89,424 for a semi-private room and $104,028 for a private room (https://bit.ly/GenWorth).
      • If you are staying in your own home, you could use your home equity.
        • Home equity loan or line of credit based on income, credit history, and amount of home equity.
        • Reverse mortgages allow you to borrow a portion of the value of your home in a lump sum, monthly payments, or as a line of credit that you draw on as needed. You do not need to repay any of the loan, or the interest, until you move out of the house.
        • Learn about long term care insurance. It can cover some or all of the costs of your care, depending on the amount of coverage you choose, if you need assistance with at least two activities of daily living, referred to as ADLs.
          • Health problems can prevent you from qualifying for a policy, so don’t wait to apply if you think you will eventually buy a policy.
          • Long term care policies have had a history of large price increases, but that may be ending.
          • Benefits are triggered when you need assistance with at least 2 Activities of Daily Living (ADLs) or have cognitive impairment.
          • There is usually a waiting period before insurance begins paying, of anywhere from 30 to 180 days.
        • Familiarize yourself with how Medicaid works in Illinois. Medicaid is a needs-based program that pays for long term care for people with limited income and assets. You must qualify based on income and assets. There are protections against impoverishing the “community spouse.” See https://bit.ly/ILMedicaidRules.

7. Designate people who can act in your place when needed and express your wishes about healthcare and end-of-life care.

  • Name Personal Representative(s) to whom medical care providers can release your private medical information under HIPAA rules (Health Insurance Portability and Accountability Act).
    • You must complete a form for each healthcare provider naming those individuals as your personal representatives. There is no standard, universally-accepted form; each provider will have their own. It might be called a Communication Consent, Medical information Release, or HIPAA release form. You can view a sample form at https://www.hipaajournal.com/hipaa-release-form/.
  • Execute a Power of Attorney for Healthcare.
    • Use the Statutory Short Form at https://bit.ly/IL-POA-Health-2021 or have your attorney draft it for you.
    • This person can:
      • Make healthcare decisions if you are unable.
      • Obtain healthcare info from your doctors and other providers
      • Make decisions about organ donation, autopsy, and disposition of the body.
  • The following documents communicate your wishes; they do not designate someone to make decisions for you the way a Power of Attorney does.
    • A Living will:
      • Only applies if you are terminally ill.
      • Provides instructions about death-delaying procedures.
      • Requires 2 witnesses.
    • Do Not Resuscitate/Practitioner Orders for Life-Sustaining Treatment (DNR/POLST)
      • Express your desires about life-sustaining treatment including CPR.
      • Require signatures of you, your doctor, and 1 witness.
  • Learn more and get statutory forms at https://bit.ly/AdvanceDirectivesIL. You can download a booklet that includes all these statutory forms along with a helpful discussion about each one from the Illinois State Medical Society at https://www.isms.org/resources/patients/personal-decision.

8. Designate people and provide instructions for managing your finances both before and after your death with a will and/or trust(s), and a Power of Attorney for Property. 

  • Name an “Authorized signer” on your checking account if you don’t have a joint owner.
    • Learn how this works by reading about convenience accounts or agency accounts from the Consumer Financial Protection Bureau at http://bit.ly/AuthSigner
    • Usually preferable to adding a joint owner. An authorized signer cannot legally use the money or asset for their own use.
  • Execute a Power of Attorney for Property to name who will manage your affairs if you are unable to to do.
    • Use the Statutory Short Form at https://bit.ly/IL_POA_Property or have your attorney draft it for you.
    • This document must have at least one witness and must be notarized.
  • Work with an attorney to draft a will. Pretty much everyone needs one.
  • Your attorney can advise you whether a trust is helpful in your situation.
  • Review your will and trust documents every 5 years or whenever changes have occurred, including:
    • Family structure: marriages, divorces, deaths, births.
    • Financial situation: increase of assets from investment growth, inheritance or settlement; decrease of assets from spending down in retirement; sale of a business, family farm or home.
    • Laws governing estates. For example, a change in how much can be left to a non-spouse heir without incurring estate tax.
  • Review titling and beneficiary designations on assets and financial accounts to be sure there are no conflicts with your will or trust.
  • For tools to help you find an attorney, see https://bit.ly/EstatePlanToolbox.

9. List important information that you or your representative may need. Tell your representative(s) where the list is located.

  • Your list could be relatively short, at least initially. You can add categories of information as you see fit and as time allows. Looking at sample forms or documents can give you ideas of what you want to include. Links to some examples are provided in the last bullet point, but you can also create your own paper document, or and electronic document that you can print and revise easily. This list contains some of the most typical kinds of information that people include.
    • Contact information for:
      • Professional services providers: healthcare providers, financial planner, tax preparer, insurance agent, attorney, veterinarian, etc.
      • Other service providers: cleaning service, lawn service, hairdresser or barber.
      • Persons you have designated as a representative or successor representative: executor, agents for power of attorney for healthcare (health proxy) and power of attorney for property, and authorized signer on checking account.
      • Beneficiaries, including successor beneficiaries under your will, trust, or POD/TOD/beneficiary designations on accounts or assets, as well as anyone with whom you jointly own an asset.
      • Family, social and religious contacts: church/synagogue/mosque, minister, social and fraternal organizations to which you belong, plus your closest friends and relatives – including former spouses and step children.
    • Financial assets and accounts.

Include account number, website, phone number, and contact name as well as how the account or asset is titled. For example, is the deed in your name only, in the name of your trust, with another person as joint tenants with right of survivorship, as a partnership, etc. Also list beneficiary, POD or TOD designations.

      • Financial accounts, including bank and credit union accounts, credit cards, mortgages, student loans, personal loans, investment accounts such as mutual fund and brokerage accounts, employer retirement plans, and IRAs, and utilities such as gas, electric, cell phone, television and internet.
      • Other titled assets such as real estate, automobiles, and boats.
      • Insurance policies: type of policy, carrier, policy number, coverage, deductibles, contact information.
      • Income sources such as pension, Social Security, and annuities.
    • Important documents and their location. Include important electronic documents and how to access them. Examples:
      • Originals and copies of wills and trusts.
      • Vital records: birth, marriage and death certificate, and divorce papers.
      • Deeds to property, automobile titles.
      • Insurance policies and other contracts.
  • Review these documents to see if one of them will work well for you, or to get ideas of what you want to include in your personal Important Information
    • Estate Planning: Your Records and Information, University of Kentucky Extension PDF document, includes most of the categories suggested above. Print the file and fill out the forms. The publication was written for people preparing to meet with their attorney, but you need the same information for your master list. https://publications.ca.uky.edu/files/FCS5422.pdf
    • Personal Information Organizer. The form appears to be published by ARAG, a legal insurance company, but you can download it anonymously for free from CIGNA at https://bit.ly/PersonalInfoOrganizer. Print the pages out and fill out the forms.
    • Personal Estate Planning Course – RecordBook from AARP is a fillable PDF document. You type your information onto the forms, save the form, and edit as needed. Download to your computer from https://bit.ly/AARPEstate.
  • Put a reminder on your calendar each year, to review your Important Information and keep it up to date.