Last week we talked about your finances and health. I emphasized that your health plays a major role in your financial picture. This is especially true as you age. Many of us over the age of 55 will be forced into retirement due to health issues and most of those people with health issues could have prevented their early retirement through regular check ups and physicals.
Let's talk about your finances and health and some steps that you need to take for yourself and your loved ones.
Step 1 - Check out your health insurance policy. I'm sure you know the deductible and extent of your coverage but do you know what happens if you go on disability both short and long term? Do you know the COBRA rules? Is your spouse covered? Lots of questions, check out your policy!
Step 2 - Disability insurance - Do you have it? If so, what does it cover and for how long? How do you qualify?
Step 3 - Retirement plan - How will it be paid? How much? And who are your beneficiaries? Can you afford to draw from your retirement before you qualify for social security?
Step 4 - Life insurance - This, of course, is a last resort but you need to know what your options will be, who your beneficiaries are, and if you have it at work, will it stop when you leave?
Lots of issues. Deal with them sooner rather than later. Because unfortunately, insurance must be purchased before you need it. Don't wait until you get sick. You and your family will be better off.
This week, let's talk about retirement accounts. Investors in the U.S. Stock Market have lost more than $10.4 trillion since its peak in October 2007. American workers lost an average of 27% in their retirement plans in 2008. The average balance declined from $69,000 in 2007 to $50,000 in 2008.
Face it. There are only 2 ways to pump up the balance in your retirement account: earn more on your investments or save more money. And you can't count on supersized gains in stocks and real estate anymore. So, try to pump up your savings. Investing just enough for the company match doesn't cut it. Push yourself as close to the limit as you can. The limit is $16,500 for a 401(k) and $5,000 for an IRA. Don't stop contributing! The AARP reports that 20% of workers 45 and older have stopped putting money into their retirement accounts. I'm telling you right now, that is a huge mistake.
And for those of you trying to save for a child's college tuition, do not forgo saving for retirement to save for college. Retirement comes first. You can't take out a loan to retire.
Try to work longer. The average age Americans retire is 60. If you can work until 67, when anyone born in 1943 or later qualifies for full Social Security benefits, you'll gain time to save more and you'll cut down the number of years you'll be tapping your nest egg.