You have finally reached retirement age! Congratulations! Now is the time to take some smart financial steps so you can relax and enjoy your newfound freedom!

Your financial checklist of things to do when you retire

Those first days after retirement can be a lot more complicated than you thought. You were under the impression that the day you returned the keys to the office would be filled with carefree joy, but having a financial plan is crucial to ensure that your final years will be as enjoyable as you always wanted them to be.

Celebrate!

Of course, you deserve to celebrate a little. Maybe throw a party for family and friends and go on vacation for a week or two to do whatever you want.

But when you’re done with all that, here are some things to do, if you haven’t done them before your last day at work.

Check your pension and make sure you have all your documents in order

Your fixed paychecks have ended, so your main source of income will be your pension payment each month. Make sure you know exactly how much you are going to receive each month because that is it and that you have all those important documents well organized. Any lump sums you received at retirement should be saved and invested and not just thrown into your checking account because they tend to disappear faster than you can imagine! More on how to invest this money later.

Find out about all those gifts and discounts

Depending on the country you live in, there may be many free things or discounts that you can take advantage of. These can include public transportation, movie tickets, restaurant meals, museum tickets, etc. Always ask before paying anywhere and always have your ID with you so you can prove your age. Find out about the specific days and times when these discounts apply and make the most of them!

Check your tax situation

In most countries, pensions are taxable income. Talk to a good tax advisor and understand how much tax you’ll have to pay so you don’t get a nasty surprise at the end of the tax year.

Check your health insurance coverage and social security

Unfortunately, this is going to become more and more important as you get older. If you have a good public health system in your country, this might be enough, but if you need private health insurance, get a good deal now while you’re still healthy and don’t wait until you’re in trouble when it will cost you a lot more.

mortgage

Hopefully you paid off your mortgage a long time ago, but if you still have a mortgage to pay off every month, there’s a temptation to pay it off in full when you retire. However, mortgages are generally the cheapest loan you have and the interest you pay is probably deductible from your pension income, so it might be an idea to keep your mortgage to reduce your taxes. Check all this out with your tax advisor before doing anything rash.

Make a budget

If you’ve received a lump sum, it’s easy to think you’re suddenly rich, but that money will have to last you (hopefully) a long time. Make a budget based on your regular monthly pension income and even try to save a little of it each month so you can afford a vacation now and then. Don’t use your savings for your monthly expenses. Keep in mind that now that you have more free time, your monthly expenses may go up instead of down. It’s easy to get into a rut of going out more, eating more, and generally spending more, so make a budget and stick to it.

investment

This is a topic that is talked about a lot. Some people wear themselves out investing in low-risk bonds that can pay 3-4% a year before taxes, or dividend-oriented stocks that can pay about the same. Others say that just because you’re retired doesn’t mean you shouldn’t invest in growth stocks that may not pay dividends but could do very well. After all, most people’s retirement horizon could be 20 to 30 years or more. This is a personal decision, but it might be an idea to have a mix of investments. Owning a rental property may also be an idea, although as you get older you may not have the energy or appetite for all the management involved.

Do not give large amounts of money to your children.

If you’re in your sixties, chances are your kids are going through the most stressful part of their lives. They probably have a large mortgage, young children, their careers are just beginning, and they are probably strapped for cash. It is possible that you have a good amount of money in the bank and you are very tempted to be generous. They might even ask you for money. Be very careful in this aspect because when you fall short, will they really help you? The biggest favor you can do them is to be financially independent so you won’t be dependent on them in the future.

Make your home retiree-friendly

Think ahead and consider downsizing to save on your monthly expenses. Maybe move to a house with fewer stairs or to an area where you don’t need a car. There is no obligation to continue managing the large family home during the few occasions when everyone comes to stay and where you are still storing your children’s junk that has been in the attic for the last 20 years. If you’re going to be traveling more, it’s probably best to live in an apartment that will be safer while you’re away and costs will be lower and more predictable each month.

start a small business

If you’re in good health, there’s no reason you can’t start your own small business. This could be a lot of fun, it will keep you busy and bring in some extra income that will always come in handy.