Give Yourself A Financial Checkup

Financial planners often ask their clients these questions to determine if they are in control of their money. So just how fiscally fit are you?

Do you have a will?
The answer to this questions hints at how organized your finances are. And, dying without a will leaves a real mess for your family.

Rx: An estate planning lawyer can write a will at related documents but expect to pay a few thousand dollars. Going DIY costs less but stick to the state rules for signing a will or it could be invalid.

How much credit card interest did you pay last month?
The perfect answer is ZERO. Annual credit card interest rates now average 16 percent so carrying a monthly balance can run through your money.

Rx: Get motivate by math. Tell yourself you’re not repaying a debt; you’re making an investment with a guaranteed 16 percent tax-free return. That’s what you get when your no longer have to pay 16 percent interest on a debt.

Do you have a strategy for taking Social Security?
Planners usually say to delay claiming Social Security as long as possible, because monthly benefits, for both you and your surviving spouse can grow as much as 8 percent for each year you wait (up to age 70). But based on other factors including work history, etc., to may pay for one spouse to claim early.

Rx: Use a benefits calculator such as the ones as or to help you and your spouse decide when you should start collecting.

Can you list all your financial accounts?
As you approach retirement, less is more. Consolidate accounts to cut down on paperwork and make it easier to organize finances.

Rx: When deciding where to move investments, favor funds with low costs or fees. Large-company retirement plans often have low-expense options, so don’t rule out staying in a big 401k if that’s where you are.

When will you pay off your mortgage?
Trick question: sometimes the right answer is “Never.” If you have a mortgage—assuming it’s not burdensome—you may get tax breaks and free up cash you can use to invest or enjoy life.

Rx: Weigh the emotional impact as well as the financial facts. Paying off debt can bring peace of mind, but it may feel like a risk to part with the cash. Make a choice that makes sense to you, working with a financial planner to see how retiring a mortgage fits with the rest of your retirement plans.

Excerpts reprinted from AARP The Magazine

Check out DFCU's Financial Wellness Seminars that cover such topics as Pre-and Post-Retirement, Social Security, Medicare and Living Debt Free.


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