RETIREMENT CRISIS IN AMERICA

#retirement #RetirementCrisis #RetirementAccounts #pensions
The three legs of the retirement stool are rickety, at best.
As Bob Pisani put it in his article for CNBC, all three legs – retirement savings, pension and Social Security – “are all in dire shape.” His article was published April 1, 2019.
The article was published to plug CNBC’s new financial wellness initiative it calls, “Invest In You: Ready, Set, Grow, “ published in partnership with Acorn.
At Vanguard, the financial services group, the median 401(k) account value for an investor age 65 and older is a mere $58,035,” the article says.
That’s about a year’s salary for the average person, and a pittance, considering all the time these folks had to save.
The St. Louis Fed concluded, “It could be worrisome that, for many American households, the total balances of their retirement accounts may not be sufficient to ensure a solid life in retirement,” the article says.
There could be many reasons for this crisis. The average person can do little about the condition of Social Security, or if their employers have cut back, eliminated or never offered pensions.
The savings part is the only thing within a person’s control.
If you are already in the 65-and-older cohort used in the Vanguard numbers, starting to save more may be advised, but it may be an exercise in futility. Working until you die may not be an option, either, because employers may not want you around anymore, or because your job is so demanding you’ll kill yourself before you get to retire.
If you are young, start socking away money now, however you can. As it grows, move it carefully from a bank to a more lucrative investment. Get good trustworthy advice as you do this.
If you are not sure how to begin saving, find a good financial coach. Bear in mind your income may not be the issue. Your spending may be the key to saving. Keep track of where every penny goes. Those pennies saved can be dollars earned in the future, to borrow from Ben Franklin.
If you are middle aged, and still have a decent job, but have very little, if anything, saved for retirement, start socking money away in bigger chunks. Again, that could involve analyzing spending habits to find savings.
Finally, no matter your age, job situation, education or background, there are many ways out there to earn extra money by devoting a few, part-time hours a week away from your job, or you can devote more time if you don’t have a job. The money you could earn could dwarf what you are otherwise earning, or did earn, at a regular W-2 job.
To check out one of the best such vehicles, message me.
The responsibility for retirement security has gradually, over the decades, be foisted upon individuals. Some 50 years ago, one knew he had a secure job, with a pension coming, as long as he or she behaved himself or herself, did satisfactory work etc. Social Security, plus that pension, and maybe a stress-free, part-time job in retirement could make one comfortable.
Pension plans and Social Security have become less stable, though Social Security should be around in some form for years to come. Pension plans? Not so much.
So the burden largely falls on the individual to secure his own retirement. If savings alone isn’t going to give you what you want in your later years, perhaps it’s time to think about doing something different – perhaps something you thought you would never do
Peter

JOB MARKET BRINGS OUT OLDER WOMEN

#JobMarket #women #OlderWomen #employment #BackInWorkforce
Erica Hernandez, at age 54, decided to go back to work after 19 years as a stay-at-home mom.
The best job market in half a century has been a boon for older women going back to work, typically after raising children for nearly 20years, according to an article in The Atlanta Journal-Constitution published April 1, 2019.
The 3.8 percent unemployment rate is near a 50-year-low, and there were a near-record 7.6 million job openings in January, the article quotes Labor Department figures.
In Hernandez’s case, she and her husband’s retirement fund had been depleted while she stayed home, and they were unable to do a lot of dining out and other fun things, the article says.
“My husband shouldered the burden all these years,” Hernandez, from South San Francisco, is quoted in the article.
Incidently, Hernandez did not get a job as a public relations executive, as she once was. She got a job as an administrative assistant, according to the article.
Therein lies the rub. Certainly, there are jobs out there for older women and others. But are the jobs as good as the job a person previously held? In many cases, they pay much less.
It’s tough for anyone who has been out of the work force for a time to go back to a job that was as good, or better, than the one they once had.
In some cases, people have lost jobs through reorganization, downsizing etc. What they find when they check out the job market is: what’s out there generally pays less, and often require as many or more working hours.
In other cases, what might be available may not give a person enough working hours to make a living. That induces people to cobble together an income with several part-time jobs, or even several full-time jobs, to allow them to live the life they’ve known.
If you are an older woman, like Hernandez, the income may not matter to you, as long as you can squirrel it away for retirement, college tuition etc. And, there could be less stress than she may have been accustomed to in her previous career.
But for others who may be approaching retirement, or facing college bills, it may not be such a convenient choice.
If that sounds like your situation, there are alternatives. First, if you have children going to college, or getting ready for college, talk to them about your financial situation. If they can apply for scholarships, and get them, that certainly helps. But, a good student can postpone college for a time and get a job that will help pay for it. This may be the only good reason to have adult children living at home.
After that discussion, determine that your retirement will be the priority. If the kids really want to go to college that badly, put the onus on them to figure out how to pay for it.
Secondly, there are many vehicles out there that can provide an income without having to take a W-2 job.They are suitable to anyone, regardless of age, education and background, if the person is willing to check them out. In fact, the income potential could potentially exceed any expected income from a traditional job. To check out one of the best such vehicles, message me.
The article about older women going back to work points out that these ladies face many obstacles, including rusty skills, a lack of confidence, employer discrimination, new technologies and social media.
If you care not to deal with those obstacles, and want to earn extra money to fund your retirement and other expenses, you may have to think outside your comfort zone and look at something completely different.
Peter

SOCIAL SECURITY: WHEN TO TAKE IT

#SocialSecurity #retirement #savings #earnings
It’s a question discussed numerous times in this space: when to take Social Security.
Maurie Backman of The Motley Fool took it on in a Christmas Day article, 2018, in The Atlanta Journal-Constitution.
Take it early, at age 62, and you get a lesser amount than you would at your full retirement age. But, if you have already retired and need to cobble together an income, taking Social Security early is an option.
Of course, the longer you wait to take it, the bigger your check will be. Wait until age 70, and your check could be pretty good-sized.
Backman cites three reasons he believes taking Social Security at age 62 might be a good idea for you: first, you are unable to work (or are having trouble finding a job, even though you are able to work); you’re in bad health; and, you’ve earned the right not to wait.
All those reasons make sense for some people. But everyone’s situation is different. Here’s one rule of thumb for everyone: don’t take it early just because you fear the government will run out of money and the checks will stop. Most experts believe Social Security will be around for quite some time, even if the government does nothing about the funding. Benefits may have to be adjusted in the future, they say, but it’s unlikely to go away entirely.
When making the Social Security decision, consider the following: what other income do you have, or will you have, in retirement. Income includes pensions, dividends and interest from your savings and investments and, perhaps, a no-stress, part-time job. Income, for some, may also include a full-time job. Yes, there are those who love their jobs enough that they don’t want to retire. If you are fortunate enough to be in that situation, and your employer will keep you on forever, that’s excellent.
Most folks, though, have jobs that will get old after a while, if they haven’t already. Others may have employers that are eager to get them retired, or at least out of their employ.
It’s a good idea, if you are among the latter categories, to have a Plan B in place that will give you income that will enable you to go with whatever happens, “retire” when you want and potentially give you financial freedom. Many such vehicles involve only a few part-time hours a week, with the potential to dwarf your working income. To check out one of the best such vehicles, message me.
Also, as you ponder when to take your Social Security, know that no matter how many years you paid into it, and no matter how good your income was, that government check alone probably won’t give you enough money to give you the retirement you want. You WILL need some other financial resources.
If you haven’t yet retired, and don’t know what your resources will be when you do retire, it’s time to start planning for it. The earlier you start planning, and the more disciplined you are, the better off you’ll be when you get older.
So, start saving, and get a good, trusted financial adviser to guide you in retirement planning. Remember, too, that retirement planning isn’t all about money, though money is a big factor. Know what you’ll want to do when you retire, and plan to make that happen.
The Social Security office nearest you can give you your options, based on your income. The wise person will have a plan so that, no matter when he or she retires, he or she will never run out of money.
Peter

RETIRE, OR DON’T RETIRE

#retire #DontRetire #retirement #working
A man on a TD Ameritrade ad tells the financial adviser that he likes working, and that his retirement plan is to keep working.
So, the adviser says, instead of creating a retirement plan, let’s create a plan for “what’s next.”
“I like that,” the gentleman says.
Oh, if only it were that simple. One likes to work, so he just keeps working. He may vary what he does as he ages, but he keeps working because he wants to.
It seems a rather inappropriate ad for this economic milieu. Today, most employees essentially have no say on when they stop working. If they don’t retire when the company wants them to, usually they are given signals to go, or else ….
Worse yet, in many situations, many are forced out of jobs either well before retirement age, or before they had planned to retire.
And, many of these folks want to keep working. But their options suddenly become very limited. They may be forced to take a job that either they don’t enjoy, pays much less than their previous job did or gobbles up more of their time than they care to give to a job. If you selected all of the above for your situation, you are not alone.
So how does one deal with planning for retirement, or for “what’s next,” in this milieu? First, as soon as you begin your career, get your head in the right place. Know that the following will, or is likely to, happen:
• The job that you were hired to do will change over time, perhaps sooner than even you may expect. If you like what you are doing, you may not like what you will be doing next. If you like where you work, you have to decide whether the changes in your employment situation are worth staying with your employer, or trying to find something more to your liking. The current job market has improved enough over the last decade that you may have more options than you realize.
• As you get older, and earn more employee benefits, you become a greater cost to your employer. Don’t necessarily go by your parents’ advice that says if you keep your nose clean, show up every day and do good work, you’ll have a job for life. Someone came up with an arbitrary matrix some years ago that says something like: in the first three years, you get more out of an employee than you pay him. After three years, as the cost of that employee increases, you are paying him more than you are getting from him. You’ve heard of being on the clock? Well, you may be on the clock for more reasons than you think.
Given all that, here’s what you do: first, save. It doesn’t matter how much, initially, you save. Even $5 a week will work, if you are not making much. You may have to go without some pleasures to do it, but do it, and don’t touch the money unless there are dire circumstances, or you are making a long-term investment in, say, a house. Also, put any raises you get into that savings. If your costs go up, cut out more discretionary spending.
Secondly, come up with a plan B that could put money in your pocket whether you survive for years at a job, or not. There are many such vehicles out there that will allow you to spend a few part-time hours a week off work, and potentially make an income that could eventually dwarf what you are earning now. To learn about one of the best such vehicles, message me.
Meanwhile, follow the old adage that says, “plan for the worst, and hope for the best.” Because you like a certain job doesn’t mean you can keep it. After all, the job doesn’t belong to you. It belongs to your employer. He or she can do with it whatever he or she pleases, even move it to a different country, or replace it with a machine.
A good job is a gift. Certainly, one earns a good job. And certainly, one can become really good at that job. It doesn’t mean the gift can’t be taken from you. It’s up to you to prepare for when the worst happens, even if it doesn’t.
So, if you like working, that’s admirable. Just don’t presume that you can always do what you like, for as long as you like.
Peter

WOMEN SEE RETIREMENT AS LIBERATING

#women #retirement #WomenInRetirement #RetiredWomen
Forget the doom and gloom.
American women are increasingly viewing their retirement years with optimism, seeing the aging process as liberating.
So writes Adam Shell for USA Today. His article was also published in the Nov. 17, 2018, edition of The Atlanta Journal-Constitution.
“Women are so enthusiastic when it comes to aging, and that is a different message than what is out there,” the articles quotes Christine Russell, senior manager of retirement and annuities at TD Ameritrade.
Seventy is the new 50, Shell writes.
The stats suggest that women are “planning for a longer life,” an acknowledgement that should home in on taking the financial steps to fund the lives they want to lead in their later years, the article quotes Russell.
If women are planning for a long, healthy and prosperous life, why can’t all of us do the same?
Everyone’s circumstances are different. You might add the adjective “wealthy” to the women who are planning so carefully.
Truth is, we all can do it, to varying degrees. If you are not wealthy, you will just need more time to plan so you can get there.
That means starting early – right when you start working. You may have to start with a small amount. Even socking away $5 every week from your paycheck will be a start. That’s the equivalent of one or two beverages from your favorite coffee shop every week.
Then, as you get raises, sock those away. As your costs go up, perhaps you can bring your lunch to work instead of buying lunch.
In short, you can plan for a healthy retirement by making it a priority in your life.
Sure, not everyone has that discipline. For some, the discipline may have to be cultivated.
Also, expenses, foreseen and unforeseen, will come up for which you may have to tap into your savings. Buying a house is a good example of a foreseen expense. A big medical bill is an example of an unforeseen expense.
Still, if you have cultivated the discipline and made retirement savings a priority, you can catch up relatively quickly.
Some believe that in your young life, you need to provide for your family first. As your children grow to adulthood, you can start saving in earnest.
That works only if you know that your job will be there for as long as you want. Few can say that today.
If you have trouble leveraging your income, perhaps leveraging your time can accomplish the same thing. There are many vehicles out there that allow people to spend a few part-time hours a week and pick up a potentially lucrative income in addition to their regular W-2 income. If you are willing to step outside of your box and check out one of the best such vehicles, message me.
Saving for retirement, and planning for a long life, mainly requires discipline and prioritizing. Anyone can do it, by spending less and saving more. You can still treat yourself, but make those treats worthwhile and rare – perhaps until those later years come.
To quote the old adage: do today what others won’t, so you can do tomorrow what others can’t.
Peter

BEING LONG IN THE TOOTH CAN BITE HARD AT WORK

#ageism #OlderWorkers #AgeDiscrimination
“He’s too old to cut the mustard anymore.”
That’s a lyric from a 1950s-era country song about a man who used to jump picket fences, but now is lucky if he can jump an inch, to paraphrase another lyric from the song.
It brings to mind a problem – or, rather, a situation – in today’s work force.
People are living longer, and some are choosing to work longer. Trouble is, their employers don’t want to keep them past a certain age.
Swapna Venugopal Ramaswamy tackled this issue in an article for the Rockland/Weschester (N.Y.) Journal. It was also published Sept. 2, 2018, in The Atlanta Journal-Constitution.
“With 10,000 baby boomers reaching 65 every day – a trend that began in 2011 and is set to continue until 2029 – it is past the time to have a conversation about attitudes toward retirement. After all, since the time Social Security set the retirement eligibility at 65 in 1936, life expectancy at birth has gone up by 20 years,” the reporter writes.
The article points out an organization called Respectful Exits, which aims to mobilize the voices and talents of aging workers.
“Age discrimination occurs when an employer treats an applicant or employee less favorably because of his or her age, “ the article quotes the U.S. Equal Opportunity Commission.
The reporter quotes Facebook CEO Mark Zuckerberg as saying that “young people are just smarter.”
Admittedly, in some lines of work, age matters. A construction laborer probably will be more productive in his 20s than in his 60s.
Athletes can be at the top of their games for a decade or two, but likely not more than that.
But in most white-collar situations, the older worker is probably no worse – in some cases, better – than his or her younger colleagues.
But, here’s the rub. Workers with more experience tend to cost employers more. They, in many cases, get more vacation time. If they are lucky enough to have them, they may tend to use the health insurance benefits more. The health insurer may raise the company’s premium because they are employing older workers.
From the worker’s viewpoint, they may not have enough money saved, or may not be able to afford to retire on Social Security and whatever pension they may have.
Some may enjoy their jobs so much they don’t want to leave.
So what’s a worker to do when, deservedly or not, they are let go? What do they do when their once-glowing performance evaluations suddenly tank? What if they keep getting messages, subliminal or otherwise, that they need to go?
First, workers, no matter what age, need to be prepared for when that happens. They need to look at other ways to make money so that they can survive, even thrive, after their job disappears.
There are many ways out there to make a potentially substantial amount of money with a few part-time hours a week. To check out one of the best, message me.
The lesson here is that the day will come in nearly everyone’s career that a tough decision will be made. Workers need to start preparing from the youngest age possible for that day, for they know not when it will come.
It may require some outside-comfort-zone thinking, but it would be wise for everyone to do it.
Peter

DECISIONS FOR A SECURE RETIREMENT

#retirement #SocialSecurity #PensionFunds #pensions
Recent reports and studies have Medicare funding drying up by 2026, with Social Security only secure for a few years after that.
Geoff Mulvihill reports that many pension funds for public workers already owe far more in benefits than they have in the bank. His article for the Associated Press was published May 26,2018, in The Atlanta Journal-Constitution.
Just two days later, the Atlanta paper published an article by Susan Tomor for the Detroit Free Press discussing how to become a 401(k) millionaire. In summary: start saving at a young age, consistently, from every paycheck you receive. Also, if you get raises, put those in the bank, too, and don’t touch the money, except to reinvest or improve your investment portfolio.
We’ve all heard the stories about people at or near retirement age who have very small nest eggs stashed away.
Obviously, they did not make that a priority as they’d gone through various life stages – marriage, children etc. Some of them might argue that there is no way they could have saved money and dealt with whatever life threw at them.
For the young person, making retirement saving a priority is essential if, of course, you don’t want to be broke in your elder years, when you might have the time to do things that you never had time to do as a youth.
It really doesn’t matter what you earn. It matters only that you take what you earn and use it wisely.
Spontaneous – some might call it frivolous – spending ought not be a big part of your life. Knowing where every cent you have is going is essential. Of course, a life of complete amusement deprivation is not good either. But choose your fun wisely, as cheaply as you can.
Check you daily expenses. Are you buying your lunch at work every day? If so, bag your own. Are you making daily coffee shop runs? Buy a Thermos, brew your own and take it with you.
Are you ending your workweek with “happy hour?” Why not have you, and your friends, pick someone’s house, each buy a favorite beverage or snacks, and gather there instead of at your favorite watering hole.
Of course, not everyone has to cheap out. But for those who insist they cannot afford to save money, it has to become a conscious decision.
Even bigger life decisions, such as how many children to have, and when, should be considered as part of creating a financial future.
Young folks, too, have to decide when, or whether to buy a home. It may be considered part of The American Dream, but there is no shame in renting, if that works better for you. On the other hand, a house can be an investment you could use later as part of your overall net worth.
If you are older, and think you are out of luck now, or even if you are younger and are looking to secure your future, there are many ways out there to earn a decent, potentially lucrative, income by spending a few part-time hours a week. The bonus: if you are diligent and consistent, it’s money no one can take away from you. To check out one of the best such vehicles, message me.
The lesson to learn with these various reports on retirement is that a secure financial future is in no one’s hands but yours. Take charge. Use what you have, to the best of your ability. Perhaps even be open to looking for things that may help boost your future.
As the adage goes, if it is to be, it’s up to me.
Peter

WHERE WOULD YOU LIVE IN RETIREMENT?

#retirement #RetirementHomes #RetirementDestinations #WhereToLive
If you had a million bucks socked away for retirement, where would you live?
Presuming you stay in the U.S., the places where $1 million would last longest in retirement are: McAllen, Texas, 42.3 years; Harlingen, Texas, 39.5 years; Richmond, Ind., 39.3 years; Kalamazoo, Mich., 38.1 years; Cleveland, Ohio, 37.4 years; Martinsville, Va., 37.1 years; Knoxville, Tenn., 36.7 years; Ashland, Ohio, 36.6 years; Jonesboro, Ark., 36.6 years; and Norman, Okla., 36.5 years.
On the other hand, the places where $1 million would be spent the fastest in retirement are: New York, N.Y., 12.5 years; Honolulu, Hawaii, 14.8 years; San Francisco, Calif, 15.9 years; Seattle, Wash., 18.7 years; Boston, Mass., 18.7 years; Orange, Calif, 18.8 years; Hilo, Hawaii, 18.9 years; Stamford, Conn., 19.3 years; Washington, Va., 19.4 years; and Kodiak, Alaska, 19.7 years.
These figures were compiled by SmartAsset.com and were part of an article by Ron Hutibise of the Sun Sentinel in Fort Lauderdale, Fla. It was also published May 14, 2018, in The Atlanta Journal-Constitution.
A couple of things are obvious. First, $1 million isn’t what one would call a lot of money today. It may have been a fortune a few decades ago, but no longer.
Second, the most expensive places might be the more desirable places to live than the least expensive places.
As the article pointed out, Fort Lauderdale came in last among Florida cities – even worse than Miami. Your cool million would be gone in 25.2 years in Fort Lauderdale, the article says.
Something else is at play here. Many people at or near retirement don’t have anywhere close to $1 million saved. It’s hard to imagine how they will survive – never mind enjoy – retirement without a decent financial cushion.
So what might the lesson be? If you are young, start saving, even if you have to give up something, or things, you enjoy. Though it may be hard to imagine what life will be like in coming decades, or whether you’ll even live that long, you still should plan for all eventualities as best you can.
If you are middle aged, or nearing retirement, and you don’t have what you think you will need to enjoy your golden years, your choices are limited. You can keep working, presuming your employer is in no rush to get rid of you. The worker shortage many employers are experiencing now, thanks to an economy that has pretty much recovered from the recession, may be a saving grace for you. That’s presuming your health is good, your job is bearable etc.
Still, that could change. You have to work under the presumption that you could be let go any day. You almost never get a warning of when that day will come. You have to keep your eyes and ears on what is happening around you, so you can spot things that might forecast your departure.
Finally, no matter what your age, there are a number of vehicles out there that will allow you to pick up extra money – potentially a lot of extra money – by dedicating a few part-time hours a week. To learn about one of the best such vehicles, message me.
If you plan well, you can retire at the appropriate time. If you plan really well, you can retire whenever you want, wherever you want.
It all depends on your diligence, how much of a priority you devote to a good retirement and the sacrifices you are willing to make. It does you no good to have enjoyed life while you are young, only to barely survive in your elder years.
Whatever you do, don’t presume the promises made throughout your life will be kept. Your retirement security is entirely in your hands.
Peter

BUYING A HOUSE REQUIRES MUCH THOUGHT

#HomeBuyingMistakes #homebuyers #BuyingAHouse #DreamHouses
Buying a home is a big decision, no matter where you are in life.
“When you’re in your 20s, your life isn’t the same as when you’re retired, and yet you’re both going to make some timing mistakes (when buying a home),” Natalie Campisi quotes Ilyse Glink, author of “100 Questions Every First-Time Home Buyer Should Ask.”
Campisi wrote her article for Bankrate.com. It was also published June 11, 2018, in The Atlanta Journal-Constitution.
Campisi discusses the various mistakes buyers in different age groups make. Young buyers, in their 20s, often get the wrong type of mortgage because they may not have had the ability to save as much for a down payment. The lesson here is to avoid adjustable rate mortgages, tempting as they might be for young buyers who see a great introductory rate.
Buyers in their 30s, meanwhile, may not be considering a future family when standing in the middle of a downtown condo with great views, Campisi writes.
Middle-age buyers in their 40s and 50s tend to overestimate their budget and buy houses they can’t afford. One can avoid this by figuring out his or her lifestyle comfort level, Campisi quotes Glink. When figuring out a budget, these buyers should leave enough room for things that are important to them, such as private school tuition for the kids, Campisi writes.
Retirees, in their 60s and older, tend to fall in love with a vacation home, Campisi writes. They get attached to a vacation home before making the decision where they might want to retire – either where they live now, a warmer climate location or even another country, Campisi writes.
In short, buying a home requires careful thought and wrong decisions, no matter how old you are, can be costly.
Younger folks may opt for a smaller, more affordable house as a starter, with plans to trade up as they get more financially settled and decide when, whether and how big their family will be.
Older folks may go from bigger house to smaller house, as children leave and the desire for less upkeep strengthens.
But it boils down to money. What if you could buy whatever you wanted, wherever you wanted? For most, that’s a dream. Yet, it could be a reality if you consider ways other than a traditional job to make money.
There are many such vehicles out there for those willing to consider escaping – even for a few hours a week – his or her comfort zone. If you are that type of person, and have the desire to live where you want and in whatever house you want, message me to check out one of the best such vehicles.
The Bankrate.com article talks a lot about the practical considerations to home buying, and less about emotional considerations.
For example, you may have sentimental attachments to a house – perhaps it’s where you raised your family or, as the article pointed out, it’s where you liked to go on vacation.
Remember that adding emotion into such a big decision can complicate matters. So, if you buy a house, think of it strictly as a house – a financial asset that provides you shelter, and comfort, of course. Your home is wherever you are.
A dream house can be created with building materials. It can also be purchased already built. A dream home is wherever you decide to settle. You can create a dream home by making the most of life wherever you are.
Peter

HAPPY RETIREES

#HappyRetirees #mortgages #MultipleSourcesOfIncome #FullCalendar
There are three characteristics that make happy retirees.
Those are a paid-off, or at least paid-down mortgage, multiple sources of income and a full calendar of activities.
So says Wes Moss, who writes a Money Matters column for The Atlanta Journal-Constitution, and has a Money Matters radio show on WSB in Atlanta. He discussed happy retirees in his April 24, 2018, newspaper column.
Moss narrowed the happiness criteria down from the research he did for his book, “You Can Retire Sooner Than You Think.”
The mortgage issue is certainly up for debate. Certainly, when one is working, paying down mortgage debt is certainly a good use of money. It’s not a substitute for saving and investing, but if you have a relatively high mortgage interest rate, applying extra money to one’s principal in mortgage payments is like putting money in your pocket.
Of course, if your interest rate is relatively low, and you have a good financial adviser, you can probably do better saving your cash and investing it well. A rule of thumb: if you have a 5 percent interest rate on your mortgage, and you have a good financial adviser who can certainly make you a good deal more than that on your money – on average, of course – then saving and investing could be more lucrative over time.
On the other hand, in a down financial market, paying down that mortgage debt IS a good use of excess cash you might have. It’s certainly better than spending it on frivolous things.
Keep in mind that the more debt you pay down early in the mortgage, the less interest you’ll be paying toward the end of the mortgage. As more of your monthly payment is applied to principal, the sooner your mortgage will be paid off.
Multiple sources of income is also a good thing – not necessarily more income, as Moss points out.
We think of income sources for retirees in terms of a pension, Social Security and perhaps a low-stress part-time job that you like doing.
If you’d been a good saver and investor in your working years, you might also use some of the dividends, interest and other income your nest egg is now earning for you. Try to refrain from touching your nest egg’s principal. Whether you die young or live a long time, as long as your principal is relatively intact, you will NEVER outlive your money.
As for a part-time job, it may serve two purposes. It will provide some pocket money and keep you busy in your elder years. However, if you don’t need the job, your time may be better spent pursuing your favorite hobbies or other activities like, say, golf or travel.
Or, you could add to your sources of income one of the many vehicles out there that allow folks – retirees or not – to make a potentially substantial income by spending a few part-time hours a week. To check out one of the best such vehicles, message me. It could allow you to spend some non-stressful, even fun, time adding to your income sources and help friends do the same.
The lesson here is to plan for your retirement while you are young. You never know when you will retire – or be retired by your employer. You never know when that one bad manager comes into your orbit and kills your career.
If you plan well, perhaps forgoing some immediate pleasures to save money, you can retire, as Moss’ book title says, sooner than you think. If you are forced to retire before you want to, good planning could allow you walk away from that job with a smile.
Peter