Leadership and Executive Development for women of all races, cultures and backgrounds
Issue link: https://diversitywoman.epubxp.com/i/91258
DW Life > National Association of Personal Finan- cial Advisors. "Tink about retiring to, not retiring from." Consider what your passions are and how you might spend more time on them when you're retired. When it's hard to stick with your savings goals, having that touchstone image can keep you going. Save early and often Yes, you've heard this before, but it's a piece of advice you can't afford to ignore. No matter what your age, put away as much toward retirement as you possibly can. If your employer offers a matching contribution, set aside at least as much as will get you the maximum match. If you're self-employed, examine your op- tions for a SEP-IRA or a solo 401K plan. "Do something," says Poore. "Even just (contributing) a couple of percentage points is a good start." Trim your everyday expenses Making trims now can free up funds you can channel into your retirement accounts, possibly saving you money on taxes. And finding smart ways to cut your spending is a useful skill that can pay dividends for the rest of your life. Tink of it as a muscle that gets stronger as you use it. Te more you're able to cut your expenses now, the less income you'll need to replace when you're retired. If you're at a loss for where to cut, call your cable company and tell them you're thinking about switching; chances are the company will lower your bill. Increasing the deductible on your car or home insurance can free up a few dollars, too. Using Mint. com's online financial management tools can help you target other ways to save. Get a handle on your parents' finances Knowing the specifics of their situation can help you assess how their financial picture might affect yours. "It's critical to know where the gaps are," says Lazetta Braxton, a fee-only financial planner in Baltimore. Can your parents afford to cover the costs of in-home help or assisted 66 DIVERSITY WOMAN Fall 2012 living? If not, what's the plan? If your parents aren't com- fortable discussing these topics, meet with a financial advi- sor—yours or theirs— to make the conversation a little bit easier. Guide your kids toward self-sufficiency If you've got an adult child living at home, make an agreement that he or she will pay rent. Even a token amount helps to establish that the child is a guest in your home and is moving toward full indepen- dence. If you're helping pay for college loans, come up with a plan for gradually diminishing your contribution. "Caring for adult children financially is one of the big- gest dangers to retirement success," says Poore. "If paying your kids' loans means that you can't save for retirement, that may lead you to be dependent on the kids that are dependent on you now." Plan to take Social Security later If Congress raises the full benefits age, you may not have a choice. Even if you do have a choice, it's often smart to do this. Every year you wait is worth ap- proximately an 8 percent increase in your future lifetime benefit, says Lassus. Don't overlook insurance "Lacking appropriate insurance can wreck even the best-laid plans," says Poore. Te right mix will vary depending on your circumstances, but both disability and long-term care insurance are worth con- sidering. If you become unable to work because of an injury or illness, disability insurance protects your income, so you'll be less likely to tap retirement funds to cover expenses. Long-term care in- surance can be expen- sive, and premiums have been rising rapid- ly. But if you can afford to buy it—at a level where you can keep paying the premiums no matter what—it can be an important element of your retire- ment security. "Long-term care insurance will become more critical as health-care costs continue to rise," says Lassus. Consider investing more aggressively Te downturn and stock market volatil- ity have spurred many women into investing conservatively. But that puts you at risk of outliving your money. "When I first got into this business, we used to plan to age 90, and people would laugh," says Lassus. "Ten 10 or 12 years ago, we said, okay, we're going to 100: can your assets last to age 100?" Historically, the growth needed to keep up with inflation over such a long period has only been pos- sible with some investment in stocks. A financial advisor can help you choose the right balance; Lassus often advises mixing eight to ten asset classes. Establish an exercise habit Speaking of living to 100, finding a form of exercise that you love and will stick with can cut your risk of chronic—and expensive—health conditions like dia- betes, heart disease, and arthritis. Be- sides, it's a proven way to ease stress. And in times like these, that's no small thing. DW Katherine Griffin is a writer and editor in the San Francisco Bay Area. www.diversitywoman.com THINKSTOCKPHOTOS