|  The
phrase, “do as I say, not as I do,” applies well to
financial planning. Most seniors would do things differently if
they could.
A 2004 Harris Interactive survey (www.harrisinteractive.com),
titled the 2004 Senior Sentiment Survey, was discussed in recent
Realty Times and Chicago Tribune articles. We pick out some of
the most pertinent points raised that could help guide where your
finances will lead you in the future.
The Present
Before we look at how today’s seniors would
do things differently, we will first look at some of the current
trends that demonstrate the current generation has not learned
from their parents’ and grandparents’ mistakes:
• The proliferation of interest-only, zero-down
and adjustable rate mortgages.
• Over half of all American women aged in
their 20s and 30s maintain less that $500 in emergency savings.
• Approximately 35 percent of American households
do not have either a checking or a savings account with a mainstream
bank – leading to the use of costly check cashing stores,
payday loan services and money transfers.
The Past
So what would today’s seniors have done differently
if they had the chance? Over half would have started saving much
earlier if they could. In particular, they would have done the
following:
• The majority would have started saving before
the age of 30.
• Put more money toward their specific retirement
plans.
• Invested in more stable growth investments.
• Not allowed themselves to become so reliant
on the Social Security system.
The Solution
Obviously, there is no hard and fast solution. However,
we can take the advice of today’s seniors and start thinking
about our future today. It doesn’t matter how small an amount
you set aside each pay period, the important thing is to start
setting that money aside. Many people find it useful to split
their money into different accounts, such as:
1. Bill Paying Account – Ensures you
have enough to pay all your bills.
2. Emergency Funds Account – Put a little
away each pay period. An ideal goal is to have three months’
worth of bill-paying ability built up in this account. Just in
case.
3. Retirement Account – However you
invest your money, it can be useful to transfer a set amount of
money each pay period into this account; then, whenever it hits
a certain limit, say, $500, invest that money in a retirement
savings plan.
4. Fun Account – This is the account
where the remainder of your paycheck goes, allowing you to enjoy
guilt-free spending!
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