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Six Steps to Later Life Financial Security

Six Steps to Later Life Financial Security

Retirement is one of few financial goals that people cannot borrow money for. There is no such thing as a “retirement loan.” Therefore, not surprisingly, one of the most frequently-cited goals that people save money for is retirement. Below are six “evergreen” time-tested steps to achieve financial security in later life:

Determine a Post-Career Income Goal
There is no magic number. The amount that people need depends on factors such as financial goals and lifestyle decisions, work plans, availability of employer benefits, health status, and estimated life expectancy. While 70-90% of income earned during full-time working years is often recommended, some older adults may spend 100-110%, especially during their “young old” years (approx. ages 65–74).

Do Some Math
A useful planning tool is the FINRA Retirement Calculator ( It has 12 questions about relevant variables including money already saved, annual income needs, expected income from other sources (e.g., a pension and/or Social Security), current age and tax rate, and assumed average annual return. The calculator provides a retirement analysis in text and chart form and details about asset accumulation over time.

Determine an Asset Allocation
This is the percentage of investments held in different asset classes including stocks, bonds, and cash assets. Having money in different places spreads out investment risk. Key factors in determining personal asset allocation percentage weights for each asset class (e.g., 50% stock, 40% bonds, and 10% cash) are age, investment time frame, and risk tolerance level, which can be determined using this online self-assessment tool (

Balance Risk and Reward
Data exist on average returns over time of various combinations of asset classes (e.g., 70% stock and 30% bonds). While past returns are no guarantee of future returns, they are instructive. Generally, the more stock in an investor’s asset allocation mix, the greater the potential for high average returns and the more volatility (i.e., the spread between gains and losses) in an investment portfolio.

Set Later Life Goals
One way to set future goals is to answer several key questions about your planned lifestyle as an older adult: Where do you want to live? Will you continue to work? What hobbies and activities will you spend time on? and What activities are on your “bucket list”? Use a goal-setting worksheet to identify a deadline date and dollar amount for each financial goal.

Anticipate Spending Plan Changes
Spending patterns can change quite a bit as people get older and/or step away from the labor force. Expenses that often increase in later life include medical and dental expenses, health insurance premiums, travel and entertainment, and gifts. Those likely to decrease include auto insurance and expenses, clothing, and utilities, property taxes, and home maintenance if people downsize. Income taxes may increase or decrease depending on factors such as changes in income in later life and required minimum distributions.

If you would like to learn more about your finances and budgeting, consider attending the “Where does your Money Go” program this January. Details are in the upcoming events section below. For additional information about planning for retirement, review the Purdue University online course Planning for a Secure Retirement ( Source: Rutgers Cooperative Extension, Barbara O’Neill, Ph.D., CFP®.

Upcoming Events

December 22-January 3 – Extension Office closed for Winter Holidays

December 28 – 4-H Junior Leader Kickoff at 3G Bowl, grades 7-12, 6 pm

January 10 & 24 – “Where Does Your Money Go?”, 2-3pm, Putnam County Public Library, register at 765-653-8411

January 11 – Last day to apply for the virtual Master Gardener course starting February 1st

January 11 – Local Leadership: Running for Office, Fairgrounds, 6-8 pm, register at

January 13, 20, 27 – Winter Walking group, 9-10am, Putnam County Fairgrounds, register at 765-653-8411

January 27 – Putnam County Extension & SWCD Annual Dinner, details to come

February 1 – Indiana 4-H Day, Indiana Statehouse

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