The Rules for Retirement

Am I a big fan of Suze Orman, the ubiquitous personal finance guru?  No. Not really.  In the past, she has recommended that people buy term-life insurance instead of whole-life insurance and invest the difference in premiums.  Yet how many people do that?  

Few, if any. In other words, she often loses touch with reality, advising as if everyone behaved ideally.  A Nobel Prize was awarded for pointing out that humans don’t often reach logical, common sensical conclusions. Having said that, I do want to repeat some of the guidelines she has offered that can help to have a financially successful retirement.

Rule #1: Delay collecting your Social Security check, if you are in good health. Don’t begin collecting at the moment you are eligible.  Instead wait until you reach the age of 70.  For each year you wait, the U.S. government will add a guaranteed eight percent to that monthly payout.

Rule #2: Learn to live on less.  The practical test is to ask yourself: do you want it, or do you need it. You will soon find that your credit card expenses, especially your grocery shopping, vacation plans, and car payments are reduced.  Use the same strategy for your big home.  Do you want it for sentimental reasons, for the occasional visits by your children, or do you really need the extra bedrooms?

Rule #3: Be aware of fraudsters.  The senior population is particularly prone to the machinations of scam artists.  Don’t be fooled by phone calls asking you for money, or for personal information. Shred all important documents before throwing them in the trash.

Rule #4: Remain financially empowered.  Always have enough cash around to cover eight months of living expenses.   Always make sure you are listed on the pension form of your spouse and check the will to make sure that you are listed as a beneficiary should the owner of an asset pass away.

Rule #5: Make sure important papers are signed and stored.  You should have the following: a) an advanced directive, b) A durable power of attorney for health care, c) a revocable living trust, d) a will, and e) a durable financial power of attorney.  Always know where these and other vital documents can be found. They should be readily available.

Rule #6: When it comes to caring for yourself or your loved one, money is no object, it is always the subject, though.  Providing that you planned for it.  Think of how you and your significant other would want to end your days, and financially plan accordingly. Plan for the worst case scenario. 

You may want to discuss these important matters with your children.  There are also free or inexpensive services that will help you prepare for your retirement.  Make use of them.

Have any thoughts on the issue? Share them with us at www.MatureAging.com, and we may post them (only after getting your permission) in a future edition.

Till next time,

Josh