Navigating Your Finances: Expert Advice for a Secure Future
Investing in Your Golden Years
As we age, our investment strategies should shift to prioritize stability and security. For retirees, it’s essential to hold at least five years’ worth of living expenses in a combination of cash and high-quality bonds. This provides a safety net against market fluctuations. While bond and cash yields may not be spectacular, they’re still respectable, with many certificates of deposit and high-yield savings accounts offering around 4.75%. As a general rule, aim for a more conservative investment mix as you get older. To determine the ideal stock allocation, subtract your age from 110. For a 79-year-old, this means allocating around a third of your portfolio to stocks and the rest to bonds and cash.
Teaching Financial Literacy to Adult Children
Many Americans struggle with financial literacy, and it’s not uncommon for adult children to lack basic money management skills. Fortunately, there are resources available to help. Recommend books like “Get a Financial Life” by Beth Kobliner, “A Healthy State of Panic” by Farnoosh Torabi, and “How to Think About Money” by Jonathan Clements. Online courses and podcasts, such as Coursera’s “Financial Planning for Young Adults” and “Financial Freestyle” with Ross Mac, can also provide valuable insights.
Retirement Savings and Income
For those nearing retirement, it’s essential to understand the rules surrounding IRA contributions. If you’re 73, single, and retired, you can still contribute to a traditional IRA, even if you’re receiving a pension and Social Security benefits. There’s no age restriction on making regular contributions, and you can contribute up to $8,000 in 2024. However, income limits apply, and you should consider whether a traditional or Roth IRA is best for your situation.
Prioritizing Debt Repayment and Savings
When it comes to buying a car, it’s tempting to focus on saving for a down payment. However, if you have high-interest debt, it’s crucial to prioritize debt repayment. Focus on paying off revolving credit card debt, which can have interest rates over 20%. Raising your credit score takes time, and adding new debt can hinder your progress. By paying off debt and improving your credit score, you’ll be eligible for better interest rates on your car loan.
Expert Insights and Resources
Kerry Hannon, a Senior Columnist at Yahoo Finance, offers expert advice on navigating your finances. With 14 books to her credit, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich,” Kerry provides valuable insights on investing, paying off debt, and securing your financial future. Follow her on Bluesky for the latest personal finance news and expert advice.
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