Are you in your 40s? Wondering how you're going to deal with the current economic pinch? Chances are you're feeling it more severely than your counterparts in their 50s and 60s, according to a recent AARP survey.
Why?
Because you may be trying to sock away money on three fronts; kids' college, your own retirement AND your parents' healthcare. The 65-year-old retiree has probably paid off her house and her kids' college.
How ARE people handling the current crunch?
The AARP survey found 61 percent of people over 45 were dining out less, 47 percent had postponed trips, 46 percent had put off a major purchase, and 27 percent said they'd retire later than originally planned!
Below we offer some PRACTICAL advice that could make a real difference to your life today - and in the future.
Key Recommendations
There's No Place like Home
Even though house prices have fallen 6% or so in the last year, it shouldn't matter unless you plan to sell, according to financial expert and coach, Jean Chatsky. Even then you can still make a profit, if you price to sell. If you have an adjustable rate mortgage that has just reset, bank the difference between the payments and add it to your slush fund.
Sock it Away! Sock it Away! Sock it Away All!
Typically the advice is to set aside 3 months worth of income as an emergency fund. Other experts suggest that times like the present call for 6 months of savings. If you're a real nervous Nellie, I suggest you try to put away 12 months!!
Don't Go Changin'
2008 saw the worst first quarter in more than 5 years for the Dow, the S&P 500 and NASDAQ.
That said, you shouldn't be panicking if the reason you agreed to your current allocation plan hasn't changed. The last thing you want to do in a time like this is be reactive. You need to let things run their course.
Remember, one of CAIM's principles is, DO NOT chase the market.
It's Not Over 'til It's Over
You know how our parents played golf, tennis and traveled, with nary a care in the world in their retirement years? It's time to face the fact that such a scenario may not happen for you. In fact you should start thinking about postponing your retirement, and extending your working life into your later years.
Dream With a Plan
Being unsure of when you want to retire does not help you plan for the future. It's time to take a good hard look at WHEN you want to close up shop. Even a rough idea of when you're going to retire will help you plan for it realistically.
Be Here Now
Being here now means refocusing on your cash flow. The important things to do are:
- Review what you're doing for retirement. I know I sound like a broken record BUT you need to be putting enough money away now!
- Track your daily spending. Save your weekly receipts. You may not think that cup of coffee adds up - BUT IT DOES!
- Set up automatic deposits so you don't even have to think about it. You can do this at your bank or with your employer.
Adhering to all of the above will go a long way to alleviating your financial worries and concerns - for now and your future.
