Unofficial summer has arrived along with dreams of great getaways, outdoor concerts, warm weather attire, a new grill, baseball games and other items that can add up to a significant chunk of hard earned money more quickly than you can say "play ball!" Before scooping up the latest deals online, consider taking a few moments to breathe in the warm air and ask a few things that can help determine long term financial resilience and the real possibilities that can exist in every season, instead of buying something because it seems necessary / really fun at this particular moment.
An Associated Press story out today notes that less than one in ten plan to wait until they can maximize their full Social Security benefits at age 70 to take them. It couldn't hurt to ask yourself a few questions to help get to or maintain a financial resilience that allows you to take Social Security when you want to instead of when you absolutely need to:
One - Do You Get Financial Advice in Your Best Interest?
First off, at least two thirds of consumers who have a retirement account think that at some point they'll need professional financial advice. A new federal rule passed by the U.S. Department of Labor (DOL) formalized what almost everyone agrees with for retirement advice: advice in the clients' best interest.
You wouldn't be alone in wondering about how this type of advice is not already standard for all advisers. Rules for such advice haven't been updated in over forty years, since 1974, when many more Americans had pensions, and no need for retirement savings advice. About 9 out of 10 Americans with retirement savings accounts believe they should receive this advice, but some financial advisers won't face a requirement to give such advice to retirement plan investors for another whole year, when the rule goes in to effect in April of 2017.
So how can you make sure you have an adviser who gives advice in your best interest before April of next year?
The DOL says that "Having your investment adviser be a fiduciary is important because, under the Department's regulatory package, it means that they are required to give you advice that is in your best interest, not their own."
So if you have an adviser or are considering getting advice from one, just ask them if they're a "fiduciary." If they pretend they can't hear you or say something along the lines of "Well, it depends," then they may not be required to give you advice in your best interest, so take that knowledge and recognize their advice could benefit them with a commission more than it could benefit you.
In a television interview this week speaking about the rule and our personal finances AARP Senior Vice President Jean Setzfand noted "We are now more than ever forced to be in the driver's seat when it comes to saving for retirement. So if we seek advice it's so important to know that it can be in our best interest."
Two - Have you done the numbers on your own?
Say you haven't gotten around to getting a financial adviser or you just don't want one. Tools and calculators exist all over the internet to help you save. One of the best free calculators free for everyone to use that doesn't push you to use any financial products after you complete the calculations remains AARP's retirement calculator.
I do work for AARP, and since I'm giving a shameless plug to my employer's retirement calculator, take it from a couple of well-respected outlets touting the benefits of the calculator. CBS News asks "What are the best retirement calculators?" and then names AARP's first along with several others. With regard to AARP's calculator, CBS' Steve Vernon adds "This calculator was very easy to use and only asked questions that were possible for a layperson to answer without having to do too much research. It provided helpful explanations for each question, and at the end of each page it summarized the answers that I provided."
It doesn't get much better than that!
For a second reference, Forbes says "This simple tool gives you a quick read on whether your retirement savings are likely to be sufficient to last through your retirement, after Social Security and any other pensions are taken into account."
Anyone can use AARP's retirement calculator and several other calculators for free at www.aarp.org/money.
Three - Have you considered health care costs?
AARP has also launched a health care costs calculator. Medicare doesn't cover all out of pocket health care costs and from the AARP's recent reports on prescription prices, prices seem headed up not down. As as we all age, we may need more prescriptions, not fewer. Many people don't plan for this, even if they do plan for their finances to remain stable as they age.
In a recent survey, American consumers thought prescription prices were already too high. In response to the survey AARP Executive Vice President Nancy LeaMond said ""The public is making it increasingly clear that profiteering by drug companies at the expense of Americans is unacceptable. People are worried about high drug prices and many are struggling because they can't afford their medications."
Take a look at the health costs calculator here: http://www.aarp.org/healthcostscalc.
Never Too Late
If you panicked when you saw the headline and thought something along the lines of, "I should have started when I was younger, so I'll just ignore this," take a deep breath. It's never too late to start planning, and you don't have to give up on that summer dream.
Now that you can book your vacation and still have a few more bucks burning a hole in your pocket, if you feel the need, go ahead and get your self a copy of what Joseph F. Coughlin, PhD, director of the Massachusetts Institute of Technology Age Lab calls "A brilliant and compelling new look at the future of aging." It's Jo Ann Jenkins' new book, Disrupt Aging, of course! I've got a copy, and it's wonderful!