How Old??? Part 2

CONTINUED FROM JANUARY 8, 2013

If you didn’t take the ‘age test’ suggesed in the first part of this blog, please go back and do that and read the first installment. My suggestions follow. I hope you find them of help and please feel free to ask questions. I have been a wealth advisor for over 25 years. I believe a large part of my job is to help educate people on financial matters.

According to the US Department of Labor, based on the Consumer Price Index, over the last 30 years inflation has been at an average rate of 4.2% per year. If that average rate continues, the money you have right now will lose half of its value in 15.55 years. Growing your money, protecting capital and controlling spending are going to be vital in having enough over the long run.

The younger a person is when they start planning, the better off they will be. That being said, even in our 50s and early 60s there are still things we can do to get on track for that happy future.

1. Make sure you are saving all you can for retirement including making use of your company’s 401(k) and regular and Roth IRAs, as allowed.
2. Pay down debt.
3. Make sure any loans you have are at the lowest possible interest rate. This may mean you will refinance your home or combine debt into one lower rate loan or credit card.
4. Reduce expenses by bundling technology services, making your home more energy efficient, purchasing a fuel efficient car, and moving to fee based advisors. Consider downsizing if your home is starting to feel larger than you want to maintain.
5. Investigate the optimum time to take your social security benefits. Between a husband and wife, there are 81 different scenarios for taking social security. Whether single, divorced, widowed, married, talk to an advisor that can show you all of the options so you can make the best choice for your situation.
6. Review your health insurance choices, especially when you reach medicare age. Your supplemental policy will make a difference in how much out of pocket money you will be spending.
7. As early as possible, look at long term health care insurance. The premiums can be lowered by purchasing husband and wife coverage at the same time from the same company. The premiums are also lower the younger you are when you make the purchase (depending on the health of the insured).
8. Review the asset allocation of your investments with your advisor. You may want to make changes after you retire to a larger portion of fixed income investments. You may also want to re think the type of investments you are using and make some changes to guaranteed investments or tax protected investments (depending on your tax bracket). The allocation and the quality of your investments are always important, but perhaps more so during retirement.

Planning is the key to being able to take on a long retirement and be financially secure and the sooner you start, the better.