Planning for a Strong Financial Future

By Lee Baker, CFP

Retired couple doing financesOne of my favorite things as a child was reading comic books. To be honest, if I had more free time, I would probably read them now. Like me, most of you probably remember the Charles Atlas ads in comic books and other magazines. You know the story: A bully kicks sand in a skinny kid’s face. Deciding to do something about it, the skinny kid sends for a free book from Charles Atlas that promises to teach him the secret to building a strong body. Mac follows the program and returns to the beach to triumph over the bully.

Well, I’m not Charles Atlas, but I do want to talk with you about building a strong financial future.

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Back in those days, many people could count on having a pension, getting a Social Security check and having some money saved on their own. The 401(k) plan hadn’t been invented yet. Today pension plans are going the way of the dodo bird and we live longer.

We need to understand the dynamics of a longer life expectancy. According to the Social Security Administration, 1 of every 4 people who are 65 years old today will live past 90, and 1 out of 10 will live past 95. So if there is a 25 percent chance you’ll live past 90, you ought to prepare for it. We can easily spend 25 years or more in retirement. I witnessed firsthand some of the challenges that my own mother faced over 35 years in retirement. The challenges can seem impossible to overcome at times, but a little planning can go a long way. So what are some of the steps we can take to prepare for our financial futures?

One thing is paying attention to our health. Exercise is the real fountain of youth, just like it helped Mac overcome the bully on the beach. Medical expenses take up a bigger and bigger share of the budget for seniors. Making wise decisions early about your health not only benefits you physically but also pays off financially.

With more of the burden of taking care of your future being shifted onto your shoulders, I encourage you to look at how you manage your financial assets before and during retirement. Historically, we have had three types of assets to invest in: stocks, bonds and cash. Over the last couple of decades the options have increased significantly. Today we can invest in gold, real estate and other commodities at the click of a button. (FYI, just because you can invest in something doesn’t mean you should!) The most important thing to keep in mind is that you need to diversify your retirement nest egg across these different types of assets in a manner that increases the chances of your money lasting as long you do.

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I’m pleased to join this month’s AARP Live on RFD-TV April 17 at 10 p.m. ET/9 p.m. CT. We’ll share information to empower you to take charge of your financial future and, as always, take your calls, comments and questions. I hope you’ll tune in, and join the conversation by calling 877-731-6733 toll-free, sending a tweet to @aarplive or using #aarplive. I hope you’ll join us.

Photo: Maica/iStock



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