But What Now?

Today’s Seattle PI is running an article by Suzy Orman as part of her “Women & Money” syndication entitled “You can find many ways to get set for retirement.” She begins by making reference to a Wachovia survey reporting that more than half of the women surveyed “feel worried” about being prepared for retirement. I found a press release from Wachovia.com, dated April 3, 2007 that does indeed report this.

Some Things Suzy Orman Suggests To Be More Prepared

1. Own your own home and have it paid off before retirement. Not only does this have the obvious benefit of no longer having a mortgage payment, but it also opens the possibility for a reverse mortgage later in life when you may need it. My mother has taken a reverse mortgage out on her house and, quite frankly, it allows her to continue to live in it and give her a little extra money every month.

2. Take advantage of your employer’s retirement bonuses. In other words, if your company (or agency as in the case of federal workers) offers a 401(k) or 403(b) with matching contribution, you are not only giving up more retirement income later on, but you’re also throwing away compensation today! I was lucky to have a boss early on in my government career who encouraged me to contribute the max amount required to receive a match, even when I thought I could not afford it at the time. It got me into the habit and I have been contributing the maximum contribution ever since.

3. Lower your auto insurance premium, by increasing the deductible to at least $1000. I guess this could go both ways if you ever got into an accident and had to pay those costly repairs.

4. Consider canceling life insurance once your children are grown. I have fairly inexpensive life insurance offered by my job that I will be able to continue after retirement, however there is really no reason to keep it because my partner will not be relying on this money to pay the mortgage if I die first. If you are still in a position of having dependents or of sharing a mortgage, it’s probably best to keep it.

5. Retire without credit card debt! This probably goes without saying, but it’s an important one. With less income in retirement, you could find yourself in a situation where all you could pay is the minimum due, which means you’d never get it paid off. If you were able to make larger payments, it’s still money that you could be using more productively.

6. Collect Social Security. You can begin at age 62, or wait until age 67. To learn more go to www.ssa.gov and search for “age reduction.”

Creating Healthy Habits With Money

Orman goes on to talk about creating healthy spending and saving habits early in life. The earlier we start saving, the more we have later on and the less likely we’ll ever become dependent upon credit cards. These habits will carry over into retirement and help teach our children better money habits.

She also suggests having your kids sit with you while you pay the bills. I really like this suggestion. Not only will they learn more about family finances, but they’ll have a better understanding of why you go to work everyday. Another side effect may easily be that they’ll get a deeper understanding at an early age about what it means to work. Hopefully, this will help them be more mindful about the career they choose.

To learn more about Suzy Orman, go to suzeorman.com.