Most Baby Boomers are now at the point that they’re headed into their retirement years. If that’s you, you may want to work on your financial literacy and investment planning strategy to achieve your desired goals.
According to a recent report from FinancialFinesse, Baby Boomers are in the strongest position financially compared to other age groups.
Despite this positive outlook, the bad news is that most Baby Boomers are increasingly becoming less confident as they inch closer to retirement. This may affect your financial planning strategy. Even though you won’t have as much time as those who are younger, it’s never too late.
This is a crucial time to make the right decisions so you can live comfortably and financially secure. The following are the top 5 tips to improve your financial literacy.
1. Find a financial advisor
Interestingly, most Americans would rather spend money elsewhere rather than invest in a financial advisor. As a Baby Boomer, you may have had extensive experience in your work life but that doesn’t always translate to how well you manage your finances. To enjoy a comfortable retirement, it helps to have a good financial advisor by your side to guide you in the process.
Your advisor will help you determine the best investment and spending strategies at this stage. For instance, he or she may suggest that you take out an inheritance loan while you wait for the probate process or help you invest in income-generating activities until your retirement benefits kick in.
2. Create a personal spending plan
As you edge towards retirement, it’s important to be conscious about where your money goes. Developing a proactive plan in advance to keep track of your spending will help align your finances with your life goals.
A smart spending plan will help you avoid impulsive buying decisions and will keep you accountable to a budget. At this time of your life, the last thing you want to do is go into debt. Once you’re fully prepared for retirement, you can enjoy doing the things you love without the stress of worrying about how you will make it through the month.
3. Evaluate your health insurance options
Although many Baby Boomers are healthier than ever before, you always have to take health emergencies into account. It’s paramount that you budget for health-related costs well in advance. If you’ve signed up for Medicare, or any supplemental retirement health plans, for instance, make sure to evaluate and review your options in terms of their associated costs. This will help you determine the most practical and realistic health insurance coverage based on your individual health issues.
4. Budget for potential long term care
The costs associated with long-term care are often ignored but can be significant enough to drain your retirement savings. Research from Long Term Care shows that up to 70 percent of 65-year olds will need some type of long-term care. This is especially important because Medicare is limited to what it covers for long-term care. If you have enough retirement income to cover it, it’s a good idea to opt for long-term care insurance coverage.
5. Review your investment portfolios regularly
When you were younger and in the workforce, the ‘set it and forget it’ formula may have seemed like a sound investment approach. However, as you phase out into retirement, it’s important that you review each of your investments to ensure they’re still financially viable before it’s too late.
You will want your investments to be properly diversified to reduce the risks of losses. The best way to do this is to invest in a target-date retirement fund or balanced fund.
Your financial literacy will make the difference
There is no ‘one size fits all’ when it comes to planning for retirement but putting a priority on your financial literacy will put you at an advantage. That way you’ll be able to make the right connections and plan accordingly depending on your individual needs.
And make sure to involve your family members in this journey so that they will be informed of your wishes when the time comes.
Do you feel your financial literacy is up to speed or do you need help planning for retirement? Please leave a comment below.