Life Financial Planning Thank you to the Brazos Valley Chapter of the Texas Society of Certified Public Accountants for providing written content for this special advertising feature in The Eagle.
Will wealth make you a happy retiree?
Tracy B. STewarT What makes retirees happy? That was the subject of a session at the recent American Institute of Certified Public Accountants’ (AICPA) annual Advanced Personal Financial Planning Conference. The expert is a Texas Tech University professor, Dr. Michael S. Finke, director of retirement planning and living in the Department of Personal Financial Planning. According to Dr. Finke, your goal is
to get the most of your retirement years and here is how you can do it. Will Wealth make you happy? Yes, because people spend more when they have more money. But wealthier retirees don’t spend as much more as you would expect. Dr. Finke’s example is that someone with $700,000 of wealth may likely spend only 10 percent more each year than someone with $200,000 of wealth. Often the wealthy under spend. They are not comfortable spending their wealth. People who have saved all their lives will continue to save; they’re not comfortable increasing their spending in retirement. In the top wealth category, consumption is less than income. These are the net savers in retirement. These people
feel good when they save some of their pension. invest in your health What do people actually do in retirement? They sleep and watch TV more than two extra hours a day. They also have more time to make meals, take care of their homes and do their own gardening. The wealthy are more physically active during retirement than the less wealthy. They spend less time watching television. They are investing in their bodies. As a result, they have fewer geriatric conditions. There is very clear evidence that higher wealth individuals are making an investment in their health. Some element of health is random and some we can influence. But overall, health is a strong predictor of a
happy retirement. Don’t be a recluse Wealthy retirees generally spend more time eating, drinking and socializing. A 2011 Gallup poll indicates that retiree happiness climbs with more hours of socializing. The more you hang out with your friends, the more likely you will have life satisfaction. Weekly contact with friends is a big predictor of happiness in retirement. invest in your relationship Married people are happier. You are way happier if you have a positive relationship with your spouse. Generally speaking, if your spouse is working and you are retired, you are less happy. You will have separate social networks. Your spouse’s
network will be related to work friends and yours will not. The positive and negative aspects of your relationship are more important with your spouse during retirement because you are around each other so much more. If you are having marital issues in retirement, those issues will go from bad to worse. You should see a marriage counselor to craft a lifestyle that you can both be satisfied with. Trust me when I tell you that divorce is very expensive. Divorce reduces your wealth. Who is the happiest? Based on Dr. Finke’s research, the happiest people in retirement are women who divorced between the ages of 60 and 65. This is helped by the fact that women
have and keep a larger social network than do men. That being said, the peak happiness comes between ages 66 and 70. You have to time your retirement just right -not too early and not too late. life is about balancing We have to balance how much happiness to have prior to versus during retirement. This is not easy, but it is important to happiness during your retirement. If, during your working years, you save enough money and invest it wisely, you won’t have to work during your retirement. While wealth makes retirees happy, earned income does not. Contact Tracy B. Stewart, CPA, PFS, CFF, CDFA, CFP® at www. TexasDivorceCPA.com.
where to clip coupons. Sometimes you can print coupons directly online or load discounts to a shopper loyalty card.
watch television, you may be able to reduce your cable or satellite package. Figure out if bundling services really does save you money. Add up how many minutes you use on mobile phone plans as well as the amount of data. You might find that you do not need the
biggest phone plan after all.
How to easily grow your savings Metro Creative ServiCeS
One of the keys to successfully managing money is to save money. Conventional financial wisdom recommends men and women have between three and four month’s worth of earnings in their savings accounts to cover themselves in case of an emergency. But many people live paycheck to paycheck, while others are mired in debt. A 2013 survey from BankRate.com found roughly threequarters of Americans have little emergency savings. Many working professionals find it hard to save any money once they have paid their monthly bills, including home expenses, child care and other common expenses. Although many Canadians are not saving enough, there seems to be a silver lining with regard to money management in that part of North America. The percentage of people who claimed they could not save dropped from 28 percent in 2012 to 17 percent in 2013, according to a BMO Financial Group report on household savings. Statistics Canada reported that the household saving rate rose to 5.4 percent in the third quarter of 2013, which is up from 5
percent in 2012. Financial analysts point to consumer trends among younger generations as one possible cause of the dwindling emphasis on saving money. Previous generations were taught the benefits of saving and being frugal, but nowadays many people struggle to distinguish between necessities and luxuries. More readily available access to credit and a more materialistic culture may also be contributing to fewer dollars being saved. While saving may seem like an uphill battle, a little saving can go a long way. Explore these relatively painless ways to cut back and save more money. • Do it yourself. Make a list of all the service providers used — from manicurists to hair stylists to lawncare professionals — and figure out where cuts can be made. Doing all or a portion of the work yourself can save a considerable amount of money. Do your own weeding and edging, only paying a landscaper to perform the more time consuming task of mowing the lawn. Skip an in-salon coloring treatment for an at-home application. Spend a day preparing meals for the week and eliminate much of your dining out expenses or fast food excursions.
• review your shopping cart. Impulse buys can bust budgets. When grocery shopping, take some time before getting in line to review your potential purchases. Compare items against your list and figure out if any items can go back on the shelf. Do the same when shopping online. Before you proceed to checkout, review items in your cart. Chances are you can delete one or two from the list. • consiDer new stores. If you find yourself spending more than you feel is necessary when shopping, look for new stores. Smaller markets may offer produce and other items at a fraction of the cost of large chain stores. Instead of doing all of your shopping in one place, shop around and buy items where they are the least expensive. For example, you may find paper products are more affordable at a pharmacy than at the supermarket. • learn to coupon effectively. Although you need not go to extremes, use coupons when shopping and learn how to pair sales with coupons to earn even greater discounts. Many blogs and websites help make the process easier, telling you when and
• scale back on certain services. Assess your lifestyle to determine which services you can live without. If you rarely
Saving does not have to be challenging. Opportunities to save money present themselves at every turn. Master the little ways to shave off expenses and grow your savings.
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