Posted By: CFP&WM On: Feb 22nd, 2010 In: In the news

Senior Spectrum June 23, 2009

Your Money Matters
10 Tips for These Difficult Economic Times
by Michael Chamberlain CFP

The recent economic changes impact everyone and particularly those who are retired. Whether it is a drop in value of your retirement account or a decrease in interest rates at the banks, everyone has noticed.

The question is what can retirees do now to shore up their finances? Some things are fairly obvious, such as delaying a vacation, going to a less costly restaurant or putting off major purchases as long as you can.

But there are other things retirees can do to help in these difficult times:

1.    Know what and where you’re spending. Saving a dollar is easier than making one. Keep track of what you spend each month. This is an easy way to help you identify those areas you might be able to cut back without impacting the quality of your life. Use pencil and paper, a computer program such as Quicken® or Excel, or an online tool available at:

2.     Shop your insurance program. There can be large differences in premiums from one company to the next and it is wise to re-shop your insurance package (home and car, etc.) with several companies every few years.  The savings are often in the hundreds of dollars.

3.    Comparison shop banking services. Many banks have raised fees and decreased interest rates.  As an example, Bank of America investment services money market account now pays a 0% interest. Customers would do well to go elsewhere. Don’t overlook your local credit union or banks outside the area. Searching online can help identify institutions with higher interest rates.

4.     Beware of something that sounds “too good to be true.” Be cautious about an invitation for a “free lunch” to learn about an “investment that can never go down,” “Earn extra money from your home,” “Long Term Care without paying for it,” etc. Remember there is often fine print or a hook and they are always selling something. If you don’t understand it, avoid it or at least seek a professional second opinion (from someone who’s not selling the product).

5.    Do not be the victim of scare tactics. Do not let salespeople take advantage of you in reaction to the recent economic havoc. An 83-year-old client was recently sold an annuity at her bank and she cannot get all her money back until she’s 93, which is totally inappropriate.

6.    Do not take retirement plan distributions if you do not need them. A new law allows retirees to not take a minimum distribution from certain retirement plans. The concept is to allow the values of the account to come back up and then resume distributions.

7.    Understand your investments costs. In this environment, it’s crucial that you have a firm understanding of all the fees (commissions, sales loads, deferred charges, redemption fees, surrender fees, account fees, management fees, distribution fees, and even statement fees).  Depending upon the size of your portfolio, going to investments with lesser costs could save you thousands of dollars a year.

8.    Proper asset allocation in your portfolio. Having the proper mix of different types of investments is the prime way to mitigate risk. The allocation that is appropriate for you is dependent upon your risk tolerance (a mental state), your risk capacity (your financial state) and your goals, which includes your timeframe. The people that felt the most pain with the recent drop in the market had an incorrect asset allocation.  Now is a good time to make sure your asset allocation is correct.

9.    Determine if you need help. It’s what you don’t know that can hurt you the most. To help identify the areas where you could use some professional assistance, a Financial Security Survey was developed. It’s free and can be very reveling.  Go to the website below and download the survey or call 800-347-1340 and it will be mailed to you.

10.  If you need help, get objective advice. Money magazine, Kiplinger Personal Finance, CNN Money, MorningStar, MSNBC, Newsweek, and AARP all have had articles recommending people get objective advice from a “fee-only” advisor.  These individuals do not sell product, so there is no conflict of interest between what is best for you and the person who is selling a product.  The publications above recommend readers go to and for a list of “fee-only” planners in your area.

While these 10 tips will not undo the effects of the changes in the economy, they offer some practical steps you can take to strengthen your finances today and position your retirement savings for improvement as the economy comes around.

Michael Chamberlain CFP®
CA Registered Investment Advisor

Send your questions to or call 800-347-1340
This article is for informational purposes and should not be taken as legal, tax or investment advice.

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