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FINANCIAL LITERACY FOR RETIREMENT

FINANCIAL LITERACY FOR RETIREMENT

FINANCIAL LITERACY FOR RETIREMENT

Financial literacy is nothing more than a skillset designed to help you be in full control of your money and your investments. The problem is that many people do not take the time to develop these skills. Think of it: You learn skills associated with home repairs, cooking, interacting with people, driving, athletics, housekeeping and a host of other things required for your daily life. So why would you neglect perfecting your financial skills?

If you want or plan to retire, or if you have recently retired, financial literacy may be key to your well being for the rest of your life. For some people, the idea of financial control can be daunting. It does not have to be, and just focusing on a few key skills may make all the difference. Spoiler alert: The bottom line may have much to do with finding the right financial advisor. But before you do that, take a few proactive steps:

  • Do you know your net worth? If you don’t, you need to calculate it. In simple terms, your net worth is what you owe, compared to what you have. You need your assets to be more than your liabilities. In financial terms, that is a positive net worth. Calculating your net worth does not have to be a complicated endeavor. We scoured the internet until we found a simple, do-it-yourself net worth calculator that is reasonable and easy to use. After you read through the rest of this article, click here to calculate your net worth.
  • Research your debt. Over the years, you have acquired credit cards, taken out personal loans, contracted a mortgage, purchased vehicles, and more. But have you carefully planned each of these debts? For example, do you even know the interest rates on your credit cards? Perhaps it is time to take advantage of a zero-interest credit card offer by transferring your balances from high interest cards. Have you looked into lowering the interest rate on your mortgage loan by refinancing your home? If you do not have any heirs, why are you still carrying life insurance, and have you looked into selling your policy for cash? Have you inquired about possible deductions on your taxes that you are not taking advantage of? If you have any high interest loans, and you have considerable savings, would it not make sense to use some savings to rid yourself of the loan, and then use the monthly cash outlay that previously went to the loan to replenish your savings?
  • Selling assets. It is important to know when the best time is to sell assets and property. For example, are you holding on to that five-bedroom home for sentimental reasons, even though all of your children are now adults and out on their own? If you determine you are in the midst of a seller’s market, perhaps it is time to sell the home and downsize, physically and financially. Or, if you have collected fine art and antiques for decades, and you are indeed downsizing, it is likely you will not have physical space for all of your acquisitions. Rather than putting them in storage, it may be time to sell, either to private collectors and/or dealers, or perhaps release them via auction. In the interest of essential financial literacy, take your time to determine the most lucrative way to sell your assets. Do the legwork and the research first.
  • Allocating income. If you are one of those fortunate people who is financially stable and comfortable, and if suddenly you are receiving additional income (Social Security, pension, inheritance, etc.), invest. Some retired people tend to save rather than invest, even though they already  have considerable liquid assets. Your financial advisor can help you determine the level of investment risk that is acceptable to you, and then point you toward investment instruments that match your exact needs.
  • The psychological angle. Before you can successfully do some of what you have read above, it is important to get your thinking straight. John Neyland, CEO of JCN Investments and Tax Advisory Group, LLC, takes a holistic approach to investing. “It is not just about making money,” Neyland says of his advisory approach. “It is about helping people have a better life. We are taught fear. We need to be taught courage.” That courage is what will enable you to take some risks with your finances. “If I were to just help people make money for the sake of making money, I haven’t done my job all the way. To me, educating clients, encouraging them and helping them make informed decisions is what it is all about. My goal is to help people improve the quality of their lives.”

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