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PLANNING |
~ BOWMAN'S MONEY COLLEGE RETIREMENT ~ |
| TUNE UPS ARE NOT JUST FOR YOUR CAR
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Planning For Retirement
I would call money the hard side of retirement. You have to have money saved because if you are the definition of retirement you are no longer personally working or generating income. There is a soft side though. That side is the planning needed for your home, your health, and the management of your assets and long term care. What do I mean? I am assuming that when you retire you will be older. You have got to face reality and accept that as you roll into your 70s and 80s you are going to slow down. Part of your retirement planning should be getting areas like your health and house in order. The effort you put into taking care of problems and taking steps to avoid problems after retirement will pay its own form of dividends later in retirement. It is easier to prepare for these things when you are working. Create plan for retirement, that also includes managing your health/home/care, while you are working. If you wait to make this plan until after you have retired you could run into unexpected issues that are harder to deal with after you no longer have a regular paycheck or the same health insurance. Prevention is the key word. Dealing with sickness or ailments after they have happened will be much more difficult to deal with than taking preventative measures now to ensure a better quality of life. Make an honest assessment of your physical health. Consider internal and external health issues. Step one of my credit rebuilding program is getting a copy of your credit report so you know where you stand. Where are you starting from? The same theory applies here. Get an all inclusive blood test done. Your doctor should have no problem ordering those tests for you. Once you get the results from the tests back and have reviewed them you will know for a fact where you stand on many internal health issues and what you may need to get to work on. Much more about your health. Just like getting your finances and health in order before the big retirement day you will want to make sure you home living conditions are ready as well. Taking care of any outstanding issues or repairs now in your home will save you a lot of hassle in retirement. Much more on preparing your home for retirement. *Part of your retirement plan should be to have paid off your home mortgage and any loans. You want to retire completely debt free. Just like having good health, a problem free home, and an adequate nest egg, being debt free will pay for itself just in the stress you wont have. *Make sure you have a living will as well as a final will. Don't wait until it is too late and you will have to depend on someone else to make your decisions for you. *You should have enough money set aside to be able to live the lifestyle you are accustomed to without having to take the principal amount of your investment out in cash. You should be ready to live off of only the interest. *Be sure part of your budget includes setting money aside for property tax so you are not surprised by the bill when it arrives every year. Planning ahead will also allow you to take advantage of any discounts offered for paying earlier than the due date. Here is where
the right insurance plays a role. Some people don't like the idea of
Disability insurance that you purchase as an individual is generally thought of when considering your employment income. People who don't have a job and do get injured to the point that they would be unable to get a job could apply for social security disability benefits. However, I suggest that if you are working you purchase short and long term disability insurance in order to safeguard your income. If you are injured and now unable to work that will throw a real wrench into your financial planning! I typically suggest purchasing basic disability insurance for working people. Disability insurance is a tool that will allow you to safely preserve your lifestyle and assets during the time you heal from an injury or sickness that prevents you from working temporarily. Real Life Story: I recently worked with Ed, a furniture delivery driver, who was injured playing his favorite sport on the weekend. He had no health insurance nor did he have any disability insurance. He injured his back so bad making a play that he was unable to return to work for 8 weeks. Those eight weeks nearly ruined him financially as he had no income. It took him a very long time to get caught up on his financial issues. A great point mentioned by Ron Lieber writing in the New York Times: "If you can afford it, you want what’s known as “own occupation” coverage instead, which should pay claims if you can’t do your old job." In Ed's case he would want to be sure that any disability insurance he has pays him until he is able to go back to his delivery job. The primary reason I suggest this low cost insurance is that I have seen too many people, like Ed, get caught in the trap of believing something serious will not happen to them. Ed was young and athletic, but an accident happened that he guessed couldn’t have happened to him. Every job I have ever worked at had a person who was the poster child for buying the health insurance and the disability insurance. They would pass up the opportunity, get some kind of injury or sickness that was not covered by workers compensation insurance, and go broke trying to make ends meet while they couldn't work. Accidents do happen and it is your responsibility to insure that "something stupid", like slipping on a child's toy on the staircase, doesn't wash away all your progress in getting your financial affairs in order. Purchase this insurance through your employer, if available, and you could pay for it with pre-taxed dollars. |
Part of any personal finance
system is taking care of retirement planning. Most personal finance plans
talk about the money needs you will have and how to get there. That is
important. Without the financial resources to live a quality life during
retirement you will spend what is supposed to be a relaxing and enjoyable
time just worrying about tomorrow. Having the right amount of money in your
next egg is critical. However, there is another part to retirement planning
that needs to be discussed. The discussion is appropriate for personal
financial planning because, as with so many things, money assets are at the
core of making them work. 
paying
for insurance that doesn't have some kind of return. They feel like they are
throwing their money away each time they make a payment because they don't
have anything to show for it. In this instance though I am talking about
peace of mind when it comes to the care of yourself and the care of your
dependents if you are no longer able to provide for them. The fact is that
even if you have taken the preventative steps we talked about "life
happens". Any number of things could happen to you and that will prevent you
from taking care of yourself. If you are unable to care for yourself could
quickly go through your assets paying someone else to take care of you.
There is a good chance that regular health insurance will not cover your
long term care. That is why I suggest "investing" in these insurances as
they fit into your budget and plan: term life insurance, disability
insurance, and long term care insurance.