Financial Tip of the Month: Financial Check-Up?
By David S. Edge
We know that we should or hopefully already have our financial house in order for retirement. Here’s a list of must haves for that retirement check-list!
1) Healthcare. Without your health coverage, it doesn’t matter how much you have or are going to get during your retirement years. Healthcare is the #1 cause of bankruptcy in retirement. Plan carefully which Medicare plan will be best for you. Remember there are dozens of options for Medicare Advantage and Medigap plans as well as Part D drug plans. Get professional help! Also, how have you prepared for Long-Term Care if it becomes necessary? 70% of American’s will need Long-Term Care and only about 7% have planned for it.
2) Have a hard time saving? Get your income on an automatic savings deduction that pays savings first. If you don’t see it or have it, you will be less likely to spend it.
3)Debt? Many of us tend to let our credit cards get out of control occasionally.A great rule of thumb is to select the credit card with the highest balance and focus all extra income on that one card until it’s paid in full. Then choose the next card. Make the minimum payments on all cards and put all the extra money towards quickly paying off one card at a time.
4) Check your Credit Report! This should be done a minimum of once a year, and the more you use credit cards the more often you should check your accounts via a phone call to customer service or check online. With Identity Theft as an ever-increasing risk, this is critical for your financial wellbeing. Also check for misinformation about payment records. Are you paying on time? Your credit report should reflect this.
5) Fees on Investments? Read your statements when they come in. If you don’t understand the statement, get assistance from a professional. You will be shocked at the fees that are sometimes charged by the Broker House or the accounts themselves for maintenance fees. These can be in the 2-5% range, especially with Mutual Funds. These fees are charged if you make money or not! Check with your planner as there are 100’s of retirement products that charge no fees except for tax reporting.
6) Thinking about paying off Stuff? Many folks think to themselves that they need to minimize their monthly expenses by taking a large chunk of their retirement savings or 401K money to pay off the car or house or other debt. This is not the way to handle this, as during retirement years it’s all about cash flow. Think of it this way, if you can get a 0% car loan for 60 months, you are using someone else’s money to finance your car purchase. That money is costing you nothing. If your retirement money can make you 3-6% in income, use that income to pay the car payment and at the end when the car is paid off you still have your principal money to make more income. Got it?
7) Budget? Most of us realize we can’t just go on spending money nillywilly in retirement. Therefore a certain amount of restraint must be put into place. What is your have-to? Versus the nice-to? Budget out monthly expenditures based on current use. Maybe there are expenses you incurred while you were working that you won’t have in retirement. Extra gas to and from work? Maybe you are not going to drive as much. Or maybe you no longer need two cars? Cleaning bills? Maybe you don’t need that uniform or dress/suit cleaning bill while you were working.
Take a fresh look at what your expenses will be versus what they were while working. There’s savings to be had and that money in the working year’s budget can be put to use somewhere else in retirement years. Do you have grown kids that you are still supporting? You may need to learn that “No” is an answer. It’s time that you need to be looking out for you. So there you have our list of the seven virtues of retirement checklist!
Need help? Remember at American Retirement Advisors, we are always here to assist you with any aspect of your retirement needs! Call us! 602-281-3898
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