Month: July 2019

Getting your finances in order can feel overwhelming, but a few key strategies can help. Here are five.

1. Pay Off Debt

From mortgages to credit card debt, eliminating the high interest that you pay on loans allows you to invest that money elsewhere. Pay off your credit cards each month, and make more than the minimum payments on all other debt.

2. Build Multiple Income Streams 

Maximizing your income from multiple income streams brings in extra cash now and provides a backup in hard times. So even if you have the steadiest of jobs, you may want to assess your skills and consider starting your own small side business.

3. Buy Insurance in the Right Amount 

At times, it can seem like we have a lot of insurance: life insurance, medical insurance, home insurance, auto insurance, umbrella insurance. But insurance is an important part of any long-term personal finance strategy. Many people have too little coverage, while others pay high premiums to cover moderate or minimal risks.

Review your true needs to get the right coverage for your lifestyle and portfolio.

4. Watch Your Credit Score 

A good credit history will help you obtain a mortgage or some other loan at a lower interest rate. So, keep it clean.

In addition to maintaining regular loan payments, review your credit report periodically to identify and address any potential errors.

You can request a free credit report each year from the three leading credit bureaus: Experian, Equifax, and TransUnion.

5. Save the Entire Salary of One Spouse

This a stretch goal for most of us, but if you can swing it, you can see significant financial growth. If you and your spouse are both earning, develop a household budget that lets you live on one spouse’s income while saving the other’s income. You’ll have to be frugal, but you’ll be rewarded in retirement.

Of all the questions when planning for retirement, two are crucial: How long will you live? And how healthy will you be? Estimating the answers to these questions will help you decide how to prepare for retirement.

Your lifespan determines how much you should save for retirement and how much you can spend once retired. It can also affect how you decide to take Social Security benefits (sooner or later), whether you buy or forgo annuities, and if you choose to obtain long-term care insurance.

Most people rely on wild guesses to determine how long they will live. In one survey by AIG Life & Retirement, more than half of people surveyed said they plan to live to 100 (an unrealistic expectation). The standard life expectancy for a 65-year-old woman today is 83, according to the Social Security Administration.

But what if you’re very healthy and you have a family history of longevity? Some calculators, such as the American Academy of Actuaries’ Longevity Illustrator atLongevity Illustrator, give you an assessment of the probability of living to different ages based on your age and health.

But life expectancy is just a part of longevity. Another important side of the equation is the number of years you have left in relatively good health. To answer this nuanced question, new technologies – from saliva-based tests to facial analysis software – offer some guidance.

Fundamentally, though, we just can’t know for sure. The healthiest among us could face a fatal car accident tomorrow. This uncertainty makes it important for would-be retirees to consider all possible scenarios when developing a financial plan.