Financial Advice: Part 6: Retirement

part 1: creating a budget
part 2: living with a budget
part 3: fine tuning a budget
part 4: major purchases
part 5: investments and savings

Retirement
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- Type A Personalities

- seek immediate challenges and results
- make decisions easily, even if they're the wrong ones
- hate the status quo and require a variety of tasks regularly
- assume authority easily
- manage a variety of tasks simultaneously
- thrive on problems
* good leaders in workplace
* leisure of retirement causes internal stress

- Type B Personalities

- accept circumestances that can't be changed
- adjust to most situations
- be more people-oriented than project-oriented
- be "laid back" or "easygoing"
- find contentment in minor tasks, such as home maintenance or yard work
- be passive about their finances
* plans can be derailed by their passive approach to money

- Change Careers
- Start developing other skills and interests
- Do consulting
- Before considering retirement, you should have a workable budget, based on the most accurate income numbers you can get your hands on
- Find out monthly pension
- Don't continue your spending habits
- Where are you getting your income from?

- pension
- IRA
- investment portfolio
- income from property you own
- your children

- Mistakes to avoid

- diversify holdings

- Prepping for retirement

- best time to start a retirement fund is 40
- when you're young, get yourself debt free

- Insurance

- Don't bank on company health plan
- Medicare probably isn't enough

- has caps
- deductibles

- Medigap

- cover gaps in medicare
- don't over do it, don't need a plan that covers everything
- get a plan that covers the abnormal

- Know your provider

1. check the company's rating
2. write the insurance commissioner's office in the company's home state
3. carefully review the specifics of your contract
- check on the renewal prememium clause

- Things you shouldn't do

1. don't act out of emotion
2. don't pull the trigger too quickly
3. don't look for an escape from the rest of the world
4. don't underestimate the strength of family ties
5. don't lose sight of the job market

- Factors for future livings arrangements

- what is the weather like in your area
- what are the utility rates like
- how accessible and affordable are hospitals
- are there many geriatric physicians in the area
- what are real estate taxes like
- what about income taxes
- what about personal property taxes

- Set up a will or trust

- if you die before you have a will, the state chooses who gets the assets
- wills are easy and inexpensive

- season 1: 20-40

- establish a reasonable lifestyle
- control your spending
- put some cash aside
* insurance strategies

- you don't have to have a deluxe insurance package
1. raise the deductible
2. shop around
3. don't forget, the more the merrier

- some companies offer discounts if you get all your insurance there

4. say, "thanks, but no thanks" to your mortgage lender
5. choose the life for you

- only good reason to have life insurance is for your family and kids
- better off w/ term insurance

* debt management strategies

- don't use credit cards
- pay cash for a dependable used car
- short home loan

* investment goals

- become debt free, then invest
- only exception: utilize company matched retirement plans
- try to keep part of your investments liquid

* savings strategy

- regular savings
- once you free up cash, start funneling it into an interest-bearing account such as mutual funds
- keep cash reserve for emergencies
- you should have about 3 months of income set aside

- Season 2: 40-60

- make sure you are debt free
- if your kid is getting ready to go to college, don't take out a loan, help your kids the best you can w/o taking on debt
* housing investments

- settle into a fiscally responsible lifestyle
- don't put all your net worth into a home
- don't do anything that will bust your budget
- move into a smaller place, this will free up more money for investment and travel

* insurance

1. continue to pay the high cost of term
2. reduce your premium by reducing the face value of your policy
3. convert your term insurance to whole life
- if your house is paid for, your children are grown, and your'e regularly saving -- reducing your coverage may be the best option

* risk

- should be the period to absorb the most risk
- look for investments that multiply, not just earn interest
- if you have enough moeny you'll ever need in "safe" investments, don't risk it
- don't if you are a widow, divorcee, or disabled

* retirement account

- IRA's

* financial goals

- define goals, as specifically as you can
- goals should be a joint decision w/ your spouse
- know what you are trying to accomplish and then select the investments that will achieve those goals with the least risk

- Season 3: 60+

- maintain your financial health
- if you havn't achieved your goals

- delay retirement
- work to become debt-free
- accumulate the supplemental funds you and your spouse will need to live on
- adopt a very conservative lifestyle

- there is no mandatory retirement age
- you can't take a 50% cut in income and expect to enjoy your retirement years
- if you can't adjust to the expected income you expect to receive after retirement at least 3 years before -- stay at your job
* alternate income

- marketable skill
- develop a marketable skill

* retirement

- develop a more conservative longrange outlook, think: protection and conservation

* investment strategy

- keep 6 months salary in a reserve account, once it accumulates more than 8 months income, shift into longer-term cash reserve account, such as CD
- goal should be to maintain a spendable income of approximately $2500/month after retirement -- including social security, investment earnings, and some generated income