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On January 9, 2005 Fred Blankenship and Lauren Reynolds
of Channel 10 News interviewed Gloria Foote. The topic of their discussion
was retirement planning. The following is the text of this interview.
Fred –
It’s a new year and a perfect time to set financial goals for your future.
Lauren –
Joining us to help this morning to figure out where to start is financial
planner Gloria Foote with Carlsbad based Financial Focus. Thanks so much
for being here today.
Gloria –
It’s my pleasure.
Lauren –
First of all, people need to plan for retirement. How soon should they
start planning and at what point should they start thinking about the age
in which they can retire?
Gloria –
Well it’s different for different people. There are those who yesterday was
way too late to be retiring and some people want to be carried out. So it
just depends on when you want to retire. But certainly retirement is
looming large on most workers today. One of the problems is that we don’t
have the company pension plan that we use to have and Social Security is in
pretty dire straights. So it is up to each one of us to save for ourselves.
So don’t procrastinate. Set a date. Get a plan and get started.
Lauren –
I guess the first thing you figure out is when you do personally want to
retire.
Gloria –
That’s exactly right.
Lauren –
So you just pick an age?
Gloria –
Well you pick a reasonable age and then you start working toward that goal.
Fred –
And do you start off with that goal? Do you start off with a number that
you’re working towards?
Gloria –
You start off with the date. Then you have to decide how much money you’re
going to need when you get there. And, the best way to do that really is to
look at how much money you’re spending today. We suggest – and this is a
great time since it is really the beginning of the new year – that you look
at what you spent in 2004. You take credit card statements, you take your
canceled checks, ATM withdrawals and when you lay those down on the dining
room table, divide them into categories for an annual look. Then divide it
by twelve, because what you don’t see when you look at the annual expense
is what it cost 1/12th of your life. One-twelfth of you tires,
homeowners, proper tax… That is a sobering number and it is critical that
you know it.
Lauren –
How long are people living in retirement?
Gloria –
Well – again, it is different for different people, but the average life
expectancy is eighty to ninety. And so, that’s a long way from sixty to say
sixty five.
Fred –
It sure is.
Gloria –
So if you want to retire at sixty or sixty five, have $70,000 a year of
income coming in, you probably need a million dollars tucked away to make
that happen. Now the slippery slope here is inflation. At three percent
inflation it takes 24 years for the costs of goods and services to double.
Now that seems like a long time, but let’s say in 12 years, just half of
that, you’re going to need 50% more than you have today to buy the same
goods and services.
Lauren –
Wait, a $6.50 mocha?
Gloria –
Well that’s exactly a good point – and that brings me to my next point.
Lauren –
How to save?
Gloria –
If you are spending three of four dollars on coffee a day, five days a week
every single month, every single year you’re probably spending about $780 a
year for coffee. Now let’s get real serious. Take that times ten. That’s
about $8,000 for coffee over a ten year period. Is that what you want to
do? Now the other thing is this…
Fred –
Is that where you money should be going?
Gloria –
Well, exactly and that’s a good place to start. And you look at that
spending plan and you can see maybe there are a lot of places where you can
cut back and save.
Lauren –
OK.
Gloria –
Save on the 401k, That’s critical and then have an investment plan outside
of that.
Lauren –
Great advice and people can contact you if they want to get more personal
advice. But think ahead that’s what basically you’re saying.
Gloria –
Absolutely and that’s where a planner can keep you going and keep you on
track.
Fred –
Great advice. Thank you very much.
Lauren –
We appreciate it.
Fred –
I’m going to re-evaluate my financial situation now.
Gloria –
Ok – we’ll be ready for you.
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