Money Management for Women 50+ : Suze Orman on Financial Planning for Retirement

A recent AARP survey revealed that 60% of seniors have had to change their retirement plans as a result of the economic downturn. Although these numbers might dismay us, there is much we can do to ease financial hardship down the road. Financial planning expert Suze Orman’s new book: The Money Class: Learn to Create Your New American Dream is filled with wisdom on how to take control of your finances and achieve your goals. Here are a few pointers to start with:

  • “Right-size” your lifestyle – living below your means is one of the best ways to avoid financial heartache. Carefully examine the line between what you want versus what you need. Establish a modest permanent standard of living rather than allowing your lifestyle to become more lavish with each pay raise.
  • Be brutally honest – Orman recommends taking a painfully realistic view of your financial situation. She says “standing in your truth” is the foundation of all smart, effective personal accounting.
  • Pay with cash – avoiding your credit and debit cards – which tend to distance us from our spending – helps eliminate the temptation to overextend ourselves, Orman says.
  • Start an 8-month emergency fund – when an individual loses their job, according to Orman it usually takes anywhere from 2-8 months to find a new one. To avoid stress and extreme financial duress, begin to set aside an 8-month fund. Apart from unemployment, this will help ease the burden of unexpected expenses: home repairs, medical bills, etc.
  • Avoid overspending on college – many parents believe they must go into debt to send their children to elite colleges. Orman discourages this mentality, pointing out that when individuals take out loans for their child’s education, they increase the likelihood of retiring without financial means. In the long run, this could become a serious burden not only for them but for their children.
  • Consider an IRA – if you don’t have an 8-month fund, and your employer won’t match your 401k contributions, you might consider investing in an IRA. For advice on AARP’s “heir-tight” IRA investments, click here.
  • Look forward, not back – “Do not mourn what you’ve lost,” Orman says. It takes the momentum and energy away from the present. Focus on doing the best you can in the here and now.

Do you have any little savings tricks or investment wisdom? Please share your thoughts in the comments below.

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