For those considering retirement or for retirees who need a fresh approach to examining their financial issues, practical suggestions are always helpful. A local expert on the psychology of money has some advice for the over-50 crowd.
An experienced educator and professional coach in the field of financial education, Syble Solomon, a nationally recognized motivational speaker, has several tips for seniors. Here are a few of them:
• Don’t give up credit cards. Having a credit card is insurance against unexpected medical or personal emergencies (even those involving your children). Often people who want to avoid debt close all credit cards when approaching retirement and then find themselves in a crisis with no immediate back-up.
• Think twice about using the equity in your home to pay off bills or to buy things. If mortgage rates rise, refinancing may not be an option. If you plan to leave your home to your children, you don’t want them strapped with two mortgages.
• Do not spend more than you bring in. Sometimes when people retire, they take lavish trips or buy expensive material items thinking it’s “the last hurrah.” Doing this can incur debt, cause stress and marital discord and threaten your ability to pay for healthcare in an emergency. Most do not want to depend on children to take care of them. Independence is crucial as we age.
• Once one or both retire, the family income shifts, and this can be a cause for marital problems. When both partners had their own source of income and suddenly that income is gone, the adjustment is not just financial; it’s emotional. The issues around the money are control, equity and freedom. Discuss finances before retirement, and have a clear understanding/agreement of who pays for what and how much discretionary income there will be. If there will not be sufficient income to lead the lifestyle you and your spouse choose, then perhaps part-time work for one or both might be the answer. In any case, communication is key to financial harmony.
• Share and update important information and documents. At any age, spouses should know passwords on each other’s accounts, where important documents are located, how to access financial planners, accountants and/or family attorneys. Wills or trusts should be updated regularly and insurance policies checked and/or renewed. Financial portfolios should be reviewed several times a year, and both partners need to understand them.
Solomon also shares theories about women who have fears regarding money due to divorce, being widowed or experiencing a change in their job status:
• Women often take few risks regarding money issues, but too much caution can sometimes cost them money.
• Some women fear losing control so they don’t trust anyone. They will hide money, not share financial responsibilities or not be honest.
• Other women will trust too much, avoid asking important questions about finances and thus be unprepared in a crisis or emergency.
• Some women fear jeopardizing relationships so they may focus too much on taking care of others rather than watching out for themselves.
• The “bag lady fear” is quite common. Women fear a catastrophe which would put them on the streets. This is why many hoard, hide or don’t communicate about financial issues.
Syble Solomon has been affiliated with the Center for Creative Leadership since 1995. She was honored as Educator of the Year by the Association of Financial Counseling and Planning Education, and she has presented to more than 10,000 women. She is the CEO of Lifewise, her own coaching and speaking business in Wilmington. LOL