Financial Decision

Make Good Financial Decisions

Financial Decision Late of The Life

The recession hit many people's plans, people of all ages. Those in middle age have had a limited time to recover as retirement comes closer. It does bring into focus the need for good financial advice and often self-discipline because once you retire you will have limited opportunities to earn extra money, even on a part time basis. What you have you certainly do not want to put at risk and you must at the same time do as much as you can to save more before you retire because the Social Security System was never intended to be more than a support to provisions that people should have been making for themselves throughout their working lives.

Most people seem to recognise they have a problem. A majority of Americans believe that they haven't got sufficient money in savings and other retirement plans to provide for a comfortable retirement. Not only that inflation may be low at present but that does not necessarily mean it will always be so. As life expectancy increases so does the amount of money you will need to make those years comfortable. If you want to, and are able to save more for your retirement then do so because in order to guarantee a comfortable retirement you need resources.

Risk Free

You can ill afford to take investment risks in later life. If you take risks you may lose some of what you have already accumulated; pick things that provide solid but risk-free growth. When the recession came 401(k) values dropped by 24%; you cannot surely afford such a loss in later life? While the economy has improved and 401(k)s should do so as well, the picture is far from good.

Social Security

The Social Security System provides for benefits that can be taken from the age of 62 but that is four years before the standard retirement age. If you have to take benefits at 62 you will receive just $750 a month as opposed to the $1,000 you would have got at 66, and the $1,320 if you can delay until you are 70. Clearly if you are fit and healthy and prepared to keep working thereby deferring benefits your chances of being comfortable in retirement improve. Social Security is an emotive subject. Benefits seem unlikely to improve because the fund is diminishing. Indeed without a significant injection of money, effectively more taxation, benefits may drop by as much as 25% by 2030. With a Republican majority in both houses of Congress there seems little chance of an imminent solution to the funding problem.

You should be able to ask yourself some questions in order to prepare for retirement:

  • What is your budget? If you take Social Security benefits too early you are tapping into your resources before you need to. Ideally you should aim to have an emergency fund as well to meet any unexpected bills.
  • Can you add to your 401(k), find other income streams and if you add your Social Security benefits what does that mean in terms of monthly and annual income?
  • Is there any significant risk in your current investments? You may be tempted to take risks as you realise you are short of what you will need in retirement. Don't!

Debt & Credit Cards

Too many people in the USA seem comfortable living with debt. The use of credit cards seems to be out of control. The average debt of users who are carrying a balance is in excess of $15,000 and a high rate of interest is applied to those balances each month though you can get rid of these debt by using quick no credit website. While those in the early stages of their career have plenty of time to pay debts off they apparently don't seem inclined to do so because there are few signs that the overall level of credit card debt in the USA is falling. Those in the later stages of their working lives have not got time on their side, especially if they have also failed to make adequate provisions for their retirement.

If you are middle aged and carrying such debt you should clear it as a matter of priority. If you are even older and within a few years of retirement, have you asked yourself how you can possibly maintain even minimum payments once you no longer have a regular pay check going into your bank each month. The point is that even if you do not use the card any more the minimum monthly payment does not reduce the balance in any significant way.

It is all too easy not to face the reality of debt anyway, especially credit card because you are not being asked to sign a check for the full amount. The other side of the coin is the amount will not suddenly go away without action on your part. The consequences of ignoring the problem will affect your future at some point and the older you are the sooner that impact will arrive. As a matter of urgency you need to start living by a realistic budget which might mean some lifestyle changes that are destined to happen anyway when you retire and you still have bills to pay and more limited income to settle them.

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