Financial Planning for Retirement and Beyond

May 2nd, 2010 | By | Category: Senior Finances

Many people claim to be experts on Senior Finances, and some genuinely are.  Others are rip-off artists and are easily exposed with the openness of today’s Internet.  One of the ‘real’ experts is Jane Bryant Quinn.  She writes a lot… books, articles, blogs.  She is an established expert on senior financial issues and SCJ believes she needs to be heard.  Senior citizens will do well to ponder the information she provides.

When SCJ recognizes value in something others have written, we share it with our readers worldwide.  Ms Quinn recently wrote an article for AARP Bulletin (April 2010) that is a must read for all pre-retirees as well as those of us already retired.  It is about financial freedom and planning for retirement in tough times.  The article is one of those great how-to-do-it ones.  It is summarized here, with thanks and gratitude to Jane:

  1. Get rid of debt. Once you reach the retirement day, and you are no longer working at a job that provides an income, your income is fixed. Be sure you plan well so your debt is eliminated by the time you retire.  This includes your mortgage.  You should own your home outright by the time you retire, so all you are obligated for is insurance, tax and maintenance.  If you cannot achieve this by retirement, consider selling the property and downsizing, or take out a 30-year mortgage with payments you can easily afford on your fixed income.  Credit cards should be at Zero, and you should be charging only what you can pay for entirely at the end of the month.
  2. Build a better budget. Create a real budget.  List all your expenses.  Then take a good look in the mirror and decide how you are going to get your spending under control.  If you are already retired, be sure you are living within your income and not drawing on principal.  Jane says, “The longer you kid yourself, the greater your chance of running out of money.”
  3. Increase your savings. Save money every chance you get.  Change your lifestyle if you have to in order to save money.  Make the tough decisions so you have enough money when you choose to retire.  If you are already retired, take a look at your budget and see where you might be able to put some money into savings, even if it is a small amount.  Small amounts add up.
  4. Wise up on investments. Listen to your financial advisor and keep your portfolio balanced.  Balanced means money in both mutual funds and bonds; inflation and taxes eat into your income.  You need some money in mutual funds for long term growth; Jane recommends stock index funds such as Vanguard and Fidelity Investments.
  5. If you are still working, keep your job if possible. Or if you are already retired and if you are able, get a job–full time or part time.  Every extra year of work improves your Social Security benefit and may offer other perks such as health insurance, increased savings and reducing the number of years your retirement income has to cover.
  6. Do whatever you can to keep health insurance if you are not yet retired. Be sure you understand the rules and requirements of your plan when you retire so you don’t inadvertently lose coverage.  Get help from an agent to find individual coverage if you need it.   Medicare coverage begins at age 65 and you will need either a supplemental policy (Medigap) or Medicare Advantage Plan at that point in your life.  Be sure to check the archives of SCJ articles on Medicare for in depth understanding of Medicare.
  7. Be smart about Social Security. There is some wisdom in drawing from your 401(k) or IRA before you apply for Social Security benefits.  Your monthly benefit check could be in the neighborhood of 76 per cent higher at 70 versus 62.
  8. Be smart about retirement funds. Review all your options regarding your retirement fund with your financial advisor.  Be sure s/he is a fee-only advisor, and not someone who is out to sell you a product such as annuities.  If you don’t understand your retirement fund, ask questions until it makes sense for you.  It’s your money, your retirement, and your life.  You deserve to understand it.
  9. Put off reverse mortgages. Reverse mortgages need to be used only when your retirement funds are running out.  A RM is a valuable option, but it needs to be put off as long as possible.  See SCJ related articles.
  10. Annuities. Again, a valuable option but one that should be put off until your late 70s or early 80s when they don’t have to last as long, and when the fixed monthly payments will be more likely to meet your needs.
  11. Work with a financial planner. This is SCJ’s mantra when it comes to financial retirement planning.  There isn’t any way the ordinary senior citizen can understand all the intricacies of financial planning, unless s/he is trained in the field.  Jane recommends you work with fee-only planners who don’t sell products, but who charge for their advice.  SCJ agrees.  Here are three sites where you can find a fee-only planner near you:

12.  Move in with your kids. This may be a last resort for some, or a good option for others.  Depends on the family.  Communal living has its advantages and may be considered at any time in life.

This is a lot of information to digest.  You may want to bookmark this article so you can refer to it indefinitely.  Hats off and thanks to Jane Bryant Quinn!

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