Investing & Saving Wisely

:: by Karl Edmunds :: For seniors approaching the time of retirement or for those living on retirement income, a workable financial plan is vital but the older we get, it is important to use a plan that is basic, simple to manage and easily understood.

Studies suggest that young people in their 20s and seniors in their 70s are much more likely to make bad decisions with investments and other financial programs. Certainly financial and investment inexperience is the predominant factor with young people but declining decision making faculties among seniors is a big factor in portfolio risk. And the best strategy to counter declining faculties is simplifying your financial plan.

What can be done…?

Live Simply: The easiest way to extend retirement resources is to live simply. Pay attention to spending and live within your means. To do this, you must know your means. Too many seniors just spend away and erode their savings and investments without much thought until it is almost impossible to recover.

Review Frequently: Managing retirement income and planning is a process and one of the most important parts of that process is consistently reviewing the status of your assets and income needs. Does the mix of assets need to be adjusted? Does the weighting of the assets need to be changed? Have personal circumstances changed? Many seniors faithfully put monthly investment summary documents in a file but fail to actually spend time examining them. Meet with a trusted advisor periodically even if you make your own decisions. We all need a check up periodically from an outside source to ensure our thinking and understanding of economic circumstances is accurate.

Stay out of Debt: In a study by the Federal Reserve in 2007, almost half of seniors 65 to 74 years old still had a mortgage and almost 4 out of 10 carried credit card balances. The continual pursuit of “stuff” is a killer for many seniors. Thinking that a new car or a new home on the beach will make me happy is a never ending pursuit and can be disastrous. Or sadly there are seniors in their 70s that have children asking for loans for help starting a new business or some other personal need. It is hard to say no. Where possible, give them the wisdom of your experience but avoid borrowing or leveraging personal assets to help children if you can’t live with the worst case scenario.

Investment Simplification: You may have a perfectly good rational for holding multiple investment accounts with different brokers coupled with several bank and savings accounts, but when you are 70+, this complexity does more harm than good. Consolidate accounts where you can. Consider whether you should be holding individual stocks and actively trading. Think about legacy planning and long term estate issues.

Get Organized: A difficult dimension of planning for many seniors is just being organized. If you have a Will in one place and your life insurance policies somewhere else and records scattered in various locations, then it is time to get organized. Pick up a small fire proof safe and get your records in one place. Make a list of key advisors including names, addresses, email and phone.

Taking steps to simplify your financial plans and approach to investment management is critical for seniors especially those over 70 years of age. By reducing complexity, you will find less financial stress in your life and it will be easier to stay actively involved managing your own affairs.

About the Author
For more than 20 years, Karl Edmunds has been a noted author within the business and management consulting arena. As a senior, he now engages his curiosity and observations about life to write about key issues of importance to the growing community of seniors (Boomers), and the value of living life to the fullest every single day.We welcome your comments and suggestions at <a title=”For-Seniors.org” href=”http://for-seniors.org” target=”_blank”>http://For-Seniors.org</a>