An article in USA Today last summer stated that African Americans run the risk of outliving their savings and even worse, run a greater risk than whites of spending the end of their lives in poverty. Why is there such a disparity? One, researchers report that we are more likely to dip into our 401(k)s and withdraw money for “emergencies” and, two, we “are less likely to invest in stocks in favor of low-risk investments and real estate, increasing the risk that their savings won’t keep pace with inflation.”
“As the market is still on a roller coaster and much is out of your control, there are some important things you should be doing,” says Bill Losey, a certified financial planner practitioner, certified senior advisor and certified retirement coach.
Losey offers the following financial and retirement resolutions for individuals in their 20s, 30s and 40s to aim for in 2011:
1. If you don’t already have one, open an IRA and/or fund a 401(k). These are generally the years when it’s toughest to scrape together the cash for investing, but starting young and having decades for tax deferred growth could provide a nice six-or seven-figure portfolio in retirement. At a minimum, save enough to get your full company match.
2. Since you will likely have two to four decades before you’ll need this money, consider investing 70–80 percent in equities and stocks. Don’t be too conservative with your allocation.
3. Remember that your ability to earn an income is your greatest asset, so go back to school, continue your education, network and do your best to make sure your job, company and career offer growth potential to carry you into your 60s and 70s. To navigate the employment landscape you will need to be nimble, be constantly learning and continually reinventing yourself to stay employable.
4. Like people in their 50 and 60s, you too, should reduce and pay down your non-deductible debt such as credit cards and auto loans. Try to be debt free, perhaps with your mortgage being the only exception, by the time you retire.
5. Finally, if you haven’t done so already, meet with a qualified estate planning attorney to have basic estate documents drawn up including wills, health care proxies, living wills and powers of attorney. Additionally, make sure you have adequate life, disability, homeowners, and umbrella liability insurance to protect you and your family.
In order to make these resolutions stick you should, “Automate the savings process either directly through payroll deduction or monthly deduction from your checking or savings account and hire an advisor to coach you, keep you on track, and keep you accountable for achieving your goals,” he says. –yvette caslin
