Only use credit cards and other multi layer products

Info icon This preview shows pages 11–12. Sign up to view the full content.

gas, based upon whatever budget you set up. Only use credit cards and other multi-layer products (like room charges) to the extent that you can pay off the balance in the month in which the money was spent. If you accrue balances that roll from month-to-month, you will pay tons of interest that robs what you could have been saving for retirement. Another roadblock to retirement success is unexpected expenses. One caveat to life is that you should always expect the unexpected. There is a very good reason that the Boy Scout motto is “Be Prepared.” Homeowners should expect that at some point they will need to replace a roof or a furnace or a refrigerator. Vehicle owners should expect to encounter maintenance issues in increasing regularity as the age of the vehicle increases. The best way to plan for these unexpected events is to build up an emergency fund to prepare for unplanned events. There is much less stress in being prepared than in further reducing a potential retirement by taking a hardship withdrawal, plan loan, or direct cash out of an IRA. It is a good practice to build up to 3-6 month's worth of expenses in an emergency fund, but we all must start at $0 and work our way up. Poor insurance coverage is a less intuitive but no less poignant roadblock to a successful retirement. Retirees (and those saving for retirement) need to consider several different types of insurance needs. They should be aware of medical insurance, car insurance, and homeowner's insurance, but what about renter's insurance? It is possible to purchase insurance when someone rents a dwelling rather than owns it. The renter's insurance will not cover the physical building but rather the personal contents stored within. This can really help create a safety net for someone should they encounter an unforeseen disaster. Especially from an estate planning perspective, retirees should also consider long-term care and life insurance products. For many, the biggest roadblock is a lack of available income to save. If a taxpayer is earning $250,000 per year and just can’t seem to find the money to save, then I have little sympathy for them. Too many people live on everything that they currently earn. They have not grasped that concept that they need to defer current consumption in order to realize a reasonable retirement. There is an easy fix for this roadblock...start a budget that includes a savings program. It is an unfortunate reality that American's in the lowest tax brackets will have the most difficult time planning for retirement. For some, just getting by and saving for retirement is not realistic when rent is overdue. People in this situation need our compassion and they are the ones who need Social Security the most. However, some individuals in this category are not responsible for what they do have. There are many people in this lower-income situation who have saved albeit small amounts to offset emergencies when they arise. Everyone should take the initiative to consider their own finances and save as much as they can after basic living needs have been met...then create discretionary spending
Image of page 11

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 12
This is the end of the preview. Sign up to access the rest of the document.
  • Spring '14
  • VOSS,JAMESA
  • Cash balance plan

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern