12 Easy Steps To Your Financial Freedom Before Retirement

Wed Apr 21, 2010, 12:29 am | 3 Comments

Jane Bryant Quinn is one of the nation’s leading commentators on personal finance, with books and columns read and trusted by millions. When times get hard, folks’ safety net of living in the present, let alone in retirement, increasingly start to diminish. The message for those in their 50s and younger is clear: If your nest is broken, mend it while there is still time.

Ms. Quinn’s book titled “Making the Most of Your Money NOW” is a classic bestseller. She offers advice how to achieve financial freedom with 12 easy steps that anybody can do. Here are the excerpts:

1. Get rid of Debt

   First and foremost, tend to your debt. When your paycheck stops, nothing is more destructive than debt under your belly. Try to prepay your mortgage so you own your home with 100% equity, especially when you step into retirement. [Don’t be Debt-ridden all your life.]

   Don’t fall prey to the slimy promises of commercial debt consolidators. However, there are legitimate debt consolidators and low-cost places that you can contact. The two you should talk to are:

   • National Foundation for Credit Counseling
   • Association of Independent Consumer Credit Counseling Agencies.

   [Beware the scams and protect your finances.]

   In the worst case, consider bankruptcy where IRA and 401(k) are protected. So don’t tap into them to cover debts that you are unable to pay. You will need those accounts for a fresh start.

2. Build a better budget

   Plan your retirement by knowing how far your income will stretch. Budget your income, liabilities, other expenses. Get your spending under control sooner than later. Don’t kid yourself. Start now.

3. Increase your savings

   Change your lifestyle to save and save more. Do it now. If you arrive at retirement with not enough money, you are cooked and would send out smoke signals all over your precious neighborhood. Don’t let that happen to you. [Increase your Savings and be debt free.]

4. Wise up on investments

   Invest in mutual funds instead of individual stocks. Better yet, diversify. [Invest and grow your money.]

5. Keep your job, if possible

   Every extra year that you work improves your Social Security benefits. It might bring you health insurance as well and probably at a lower cost to you. [Tips for how to advance in your career.]

6. Keep your health insurance, if possible

   Find out first if your company offers retiree coverages in case you move to another state. If it doesn’t, stay put. Find an agent through the National Association of Health Underwriters.
   [Make the most of your Insurance.]

7. Be smart about Social Security

   Delay collect social security benefits as far as you can. Instead, if need be, draw from 401(k) and IRA first. If you can wait until 70, your check will be about 76% higher than if you had started at 62. [At 61, here is my research about Social Security.]

8. Be smart about retirement funds

   If you have a traditional pension and take it as lump sum, don’t hand it to a broker or planner who wants to sell you products. Choose index funds yourself or work with a free-only financial planner. [Save and invest for your retirement.]

9. Put off reverse mortgages

   When you turn 62, salespeople come out in force, urging you to strip the equity out of your home to support your spending now. Don’t do it. [Make smart decisions about your Mortgage.]

10. Annuities

    Annuity is when you take a sum of money and use it to buy income for life. Inflation might creep in so don’t buy an annuity too early. Stay away from the fancy, tax-deferred annuities that make big promises but deliver little. [Tips for tax-advantaged investing for a lifetime.]

11. Work with a financial planner

    Planners are very helpful in setting up your budget even though you can do it yourself. But for more complex investments, don’t leave home without them. Three places you will find a fee-only planner near you:

    • Garret Planning Network
    • Alliance of Cambridge Advisers
    • National Association of Personal Financial Advisers

    [Credit, Debt, & Financial Advisers.]

12. Move in with your kids

    This is the utmost last but least resort if all else fails. For most, that should be motivation enough to get moving on your own plan for financial success.

In a Nutshell
The sooner you start working on the 11 easy step (skipping the 12th for now), the better condition you will be in at the time when you retire. Not only that, you will live a sound and successful financial life at any age, however old you are now.

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