With the New Year, almost without fail, most of us make our resolutions and one of them probably has something to do with money. A common resolution is to “save more for retirement” that often, as weeks or months go by, turns into “I’ll set aside a few dollars after I do this or pay that….” Let’s turn that on its head and suggest that you spend this year getting a handle on how you are spending money.
Even with the economy rebounding, more Americans are stressed out about money than ever before and many women carry the weight of that burden. This financial stress is actually hurting us, both emotionally and physically. Financial stress is directly linked to high blood pressure, ulcers, headaches and depression not to mention it’s the second leading cause of divorce in our country. How about we take a different tack to that New Year’s Resolution and spend the year figuring out why we’re stressed?
For many people, one of the roots of this stress is simply not knowing where their money is going. Understanding where we are spending our dollars is the first step to understanding why we are spending those dollars. Are you eating out too often simply because you aren’t sure what to cook, or perhaps, as a newly single woman, you aren’t thrilled about going home to an empty house so you delay the inevitable by eating out.
Just like a personal trainer can help you get in shape physically, a financial coach can help you get fit with your money. They can help you understand your financial issues and habits and guide change in your behavior with your money. There are many great financial coaches but be sure to look for one that has had rigorous and comprehensive training.
This year, make your New Year’s resolution to understand how you spend your money so all your future years can be less stressful and more savings focused.
It’s time, you’ve been in the workforce for decades and you are thinking of pulling the trigger and retiring from your job. You worked hard at putting your financial house in order, reviewed your potential retirement expenses and income sources and now it’s time to think about collecting Social Security.
Did you know that there are over 1,300 different strategies for collecting your benefit? Some of these strategies will net you over $75,000 (during a lifetime) more than others. Additionally, there are over a dozen different items that you need to make a decision about and an eight year time frame during which you can make those decisions. And that’s just if you are single. There are nearly twice as many decision points if you are married and you can add more months to the equation. And you thought Common Core math was tough?
It is estimated that 90% of American retirees don’t maximize their Social Security benefits. Before you potentially leave a significant amount of money on the table, consider speaking with an advisor who can prepare you for the decisions that you face. Seek an financial advisor who is familiar with the process that can help guide you when it comes to making some very important decisions like:
- Choosing between a spousal benefit or your own.
- Whether to file or suspend.
- Collecting against your ex-spouse versus collecting your own benefit.
- Collecting early or letting your benefit build for a few years.
Let’s focus for a minute on collecting early versus letting your benefit build. It is Economics 101 that inflation on a higher amount will net you more later in life. However, every situation is different and finding a professional that can advise you on your unique financial circumstances may be the difference between being comfortable in your golden years or having to ask the kids for help.
If you are married, one of the other things you need to consider is making sure that your survivor receives the best possible benefit when you are gone. By maximizing your benefits and exploring your options you can help ensure a successful retirement.
Good retirement planning is a balance of saving for tomorrow while maximizing your enjoyment of today. Are you holding out for when you’ll be retired “and you will get to do all those things you’ve been looking forward to doing?” Many financial advisors are wising up to the new reality of retirement. Retirement is in actuality an imaginary point on life’s path. People need to live their lives balancing enjoyment now and anticipation for later.
Now, this isn’t a license to ignore common-sense rules and throw caution to the wind with no thought to tomorrow (and, yes, some people actually live like this…). It is important to take time today to enjoy life while on the path. Surprisingly, many of the things people put off (taking care of relationships, postponing their overall well-being, reconnecting with old friends) cost little, provide perspective on what future retirement might look like, and can improve your health, which studies show helps improve your retirement finances.
The quickest route to a disappointing retirement is failing to contemplate, understand and experience what you’ll do when you get there. How will you know if you don’t do a little exploring now? Take a moment and speak with your financial advisor about the things you can do now to bring some perspective to your path to retirement.