What’s your excuse for doing one thing over another when it comes to finances? Sometimes you want to justify your actions instead of thinking through what is actually best for you and your money. Here are three common decisions people make and why the excuses just don’t add up.
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1:15 Taking your social security
The earliest you can take money out is at 62 years old. Right now it’s projected that the reserve will be depleted at 2035, so there may be some changes to social security. Don’t claim your money at 62 just because you want to get it out of the system. Do it if it’s right for your plan. Think about variables such as life expectancy, taxation, spousal benefits. Then, think about the burn rate — how many of your assets you’ll burn through before getting social security.
5:29 Trying to make up for lost time
Find out what kind of rate of return you need to make your plan work. Go through your capacity, attitude, and needs to see what kind of returns you need. Statistics say 69 percent of people surveyed by Employee Benefit Research Institute think they have enough money for retirement, but only 41 percent have actually calculated it. You need to have a plan to dictate the decisions of what you do.
7:54 Keeping cash in the bank
When you have cash in the bank you still need to consider things like inflation and taxes. Understand what liquidity really means. Having a lot of money in cash is not prudent, so just have the amount you need to feel comfortable.
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