5 smart money moves for your first 5 years of retirement

When you dream of retirement, you figure you’ll finally enjoy worry-free living. But the first few years can prove surprisingly tense.

A big cash outlay or costly divorce can upend your best-laid plans. Getting ensnared in a scam or buying the wrong insurance can also sabotage the first phase of your retirement.

There’s a natural urge to live it up once you retire. Why wait? You hear stories of overly frugal types who are reluctant to spend through their 60s and 70s, only to find themselves beset by illness or injury when they’re ready to tap their savings.

“The trouble with retirement is this: the less money you can spend in the early years, the better off you will be financially in the later years, while capacity to do fun things is the inverse,” said Matt Paronish, an Indianapolis-based adviser. 

To minimize your risk, make wise money decisions during the first five years of retirement. Here are five examples of smart moves that can preserve your wealth (and sanity):

1. Beware of large, looming expenses. While it’s sometimes hard to predict when you will need a new car or new roof, think ahead and identify what five- or even six-figure expenditures loom in the near future. Ideally, avoid these giant costs right after you retire.

“You want to preserve cash early in retirement,” said James Regan, a Phoenix-based financial adviser. This gives your nest egg more room to grow in a bull market—and a chance to recover from a bear market.

Advance planning and research can eliminate nasty surprises. If you intend to sell your home and downsize, for example, ask a local real estate agent about any unforeseen costs that sellers incur in your area.

In Florida, home sellers may think they can name their price as buyers surge into the state. But those buyers need to obtain homeowner insurance, and most carriers will not issue an insurance policy in Florida if the roof is more than 15 years old. As a result, sellers may need to pay for a new roof before the property can change…

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