by Kelsey Libert
In the year 2000, approximately 2.5 million Americans turned 65. In 2013, more than 3.5 million Americans will pass that milestone. By 2030, the over-65 crowd will expand to 72 million people, up from 40 million in 2010.
The good news is, according to a 2012 report from the Federal Agency Forum, the number of senior citizens living in poverty has declined -6% since the mid-1970s, while the proportion of older Americans enjoying a "high income" increased +13%.
The new concern becomes managing this income into retirement. Following are seven tips for managing your finances through your golden years -- no matter how long your retirement.
1. Determine Your Net Worth
The U.S. Department of Labor recommends that you start by determining your net worth - the total value of your assets minus the value of your debts. This CNN Money Net Worth Calculator is a great place to start.
2. Calculate your Recurring Expenses
Next, you need to create a budget for your recurring expenses. Determining how much of your money is going where, is essential to saving over the long term.
Your biggest financial weakness here is the unexpected recurring expenses, such as the cost of your vices. It's a good plan to cut your vices now, which could help you save over $1,000 annually. This interactive quiz will help you figure out your annual savings based on your current consumption of coffee, fast food, cigarettes, lotto tickets and more.
Click below to find out what your vices cost you.
3. Know your retirement needs
Experts estimate that you will need about 70 percent of your preretirement income - lower earners, 90 percent or more - to maintain your standard of living when you stop working. The US Department of Labor provides two financial guides to help you figure out your retirement needs:
4. Find out about your Social Security Benefits
Your Social Security benefits pay out on average 40 percent of what you earned before retirement. You may be able to estimate your benefit by using the retirement estimator on the Social Security Administration's website.
5. Get Credit for Your Retirement Savings Contributions.
You may be eligible for a tax credit if you make eligible contributions to an employer-sponsored retirement plan or to an individual retirement arrangement. There are six things the IRS wants you to know about the Savers Credit, which you should read in depth.
A broad diversification strategy is often recommended by the top financial firms. Your optimal asset allocation mix will vary based on your financial qualifications, appetite for risk and tolerance for illiquidity
There are several online tools and resources that will help you decide which diversification strategy is best for you. Fidelity's Asset Diversification Planner offers diversification advice, a risk questionnaire, and five model portfolios. Vanguard also offers a tool to determine your asset allocation. For further reading, Morningstar also offers a course on diversification.
7. Rely on the Reverse Mortgage Calculator (If Needed)
Reverse mortgages are a great way for senior to supplement their income by tapping into equity in their homes. The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage or HECM, and is only available through an FHA approved lender.
Of course, all these tools are quite generic and for personalized planning tailored to your specific needs and circumstances it is best to consult a financial planner, preferably one with the CFP (Certified Financial Planner) credential.