11 ways to protect your cash (and sanity) as you age
As an old financial goat, I often get questions about aging from clients, seminar attendees and readers. I’ve no wondrous wisdom, but here are my 11 most offered tips that I sense few undertake:
1. FINANCE A LONG LIFE.
You’ll likely live longer than you expect. In 1952, expectancy averaged 68.6 years. By 2006, it was
77.8. If you and your spouse are
65, odds favor one of you hitting
90. Maybe older! Invest as if you’ll reach that milestone. Doing otherwise invites aged poverty. Little is more brutal.
2. DECIDE ON FAMILY LIMITS.
Before it arises, decide with your spouse the limits on what you will and won’t do to support family members. Too much or too little causes bad outcomes. If the topic of support comes up, and you didn’t plan in advance, you will be too emotional and likely overgive or undergive. Planning early saves relationships later.
3. CONSIDER DOWNSIZING.
It saves money, makes life more manageable and eases future burdens on offspring.
4. CONSIDER UPSIZING.
It allows for big gatherings and room for lots of grandkids. Nega- tives are higher cost and extra upkeep.
5. MOVE CLOSER TO KIDS.
Maybe you can coerce your kids to do more for you. And if your kids are good, you will want them helping you as you age. All good.
6. INVOLVE KIDS IN CHOICES.
This requires that they are up to it. But the more you can do this, the less hostility will arise over time. And, as per above, you likely want and need their help eventually. Plus, you’ll learn a whole new side of them.
7. DRIVE A SAFE CAR.
When I was young, I hot-rodded. Now I know I can’t drive as well as I could (or thought I could). Time is against you. It only takes one idiot to ruin your life. That idiot could be you. My wife and kids were saved by her Volvo in the 1980s in a head-on with a drunk. I came to love Volvo real fast. Cars are even safer now. Opt against the road idiot.
8. BUILD A CASH CUSHION.
Not everyone is highly disciplined about spending and planning. If you suffer a big gap between plans and realities, it causes anxiety — which makes for worse investors and hence worse results. Create an extra cushion year by year so at the end you aren’t trying to catch the ball with extremely shaky hands.
9. DON’T FRET OVER WORTH.
J. Paul Getty, when America’s richest man, famously said that really rich people hadn’t a close clue what they were worth be- cause they owned illiquid assets that were impossible to price. If you aren’t rich, obsessing over exactly what you’re worth makes even less sense. Your sense of net worth is just a planning tool for the future.
10. HAVE A BACKUP HELPER.
Whether it’s you, a loved one or a professional, be clear who should oversee your finances if your first choice can’t. A decision made in haste and emotion could be an expensive one.
11. REMEMBER: ANGER SLAYS.
I got huge peace of mind when a psychologist buddy taught me to live my actions as if I’d live forever and my emotions as if I knew I’d be dead in 30 days. Every time I get angry, I ask myself if I’d waste time over “this” if I knew I had only 30 days to live. I never do. It’s calming. Anger slays investors and you.