The start of a new year is a great time to get your finances in order. This is especially important for seniors who may be living on a fixed income and whose decisions about money could have a profound effect on their security in their later years. 

There are three specific tasks retirees should complete ASAP to make sure they're on track for a good 2021 -- and are securing their finances for their future as well. 

Senior couple walking on the beach.

Image source: Getty Images.

1. Rebalance your portfolio 

As a retiree, it's critical that your money is invested in the right asset mix so it can produce the kind of returns you need while also minimizing risk, since you don't have time to wait out downturns in the market.

Unfortunately, far too many seniors don't take the time to review their holdings to make sure their portfolios haven't become unbalanced. And they also don't adjust their portfolios each year to account for their changing risk tolerance as they age. 

As 2021 gets under way, it's a good time to ensure you haven't made that mistake. Take a close look at your holdings to see if you've got the right percentage of your money in the market. If you aren't sure, subtract your age from 110 to see the approximate percentage that should be in equities. And ensure the stocks you invested in are a diverse mix, so you aren't risking your retirement security on just one company or industry. 

2. Confirm your withdrawal rate

Both your investment performance and your withdrawal rate will determine if your nest egg lasts through retirement. If you're taking too much money out, you're setting yourself up for trouble later on. 

There are a number of techniques to choose how much you'll withdraw, but the Center for Retirement Research suggests taking a percentage-based approach and using tables from the IRS to determine what percent of your account balance you should take out. If you follow this approach, you'll end up withdrawing a different amount each year.

Whatever method you choose, review your planned distributions at the beginning of the year -- both to make sure you aren't taking out too much and that your distributions will combine with Social Security checks to provide the income you need. 

3. Prepare for RMDs

Seniors with certain retirement accounts, including traditional 401(k)s and IRAs, are required to take minimum distributions (RMDs) each year after turning 72. In 2020, coronavirus relief legislation suspended RMD requirements, so retirees got a reprieve. But at least as of now, RMDs are back in 2021. 

Failure to take required distributions has serious consequences, as you'll be subject to a tax penalty equaling 50% of the missed withdrawal. Make your plans for when and how you'll take out the required sum in 2021 to avoid sending extra money to the IRS unnecessarily. 

You'll also need to look at the effect of RMDs on your overall tax situation, as the withdrawn funds will be taxed at ordinary rates. And, depending on how much you take out, they could render part of your Social Security benefits taxable

By making sure you have the right asset allocation, reviewing your withdrawal rate, and complying with RMD rules, you can protect your nest egg not just this year, but throughout the rest of your retirement. It's definitely worth checking these items off your to-do list.