The Costco Connection - January 2014

JANUARY 2014 ;e Costco Connection 19 you wait until age 70 your benefits will be more than 75 percent higher. That’s a big increase in later-life income that can make for a much more comfortable retirement if you anticipate a long life. (Half of today’s 65-year-olds will still be alive into their 80s and beyond.) Whether you are 40 or 60 today, take the time to learn about the power of delaying. I think once you understand the payoff you will be motivated to adjust your retirement planning so you can delay. (Note for married couples: Only the higher-earning spouse needs to delay to age 70.) The AARP has a free online calculator at www.aarp. org/work/social-security/social-security-benefits- calculator.html that will walk you through your potential Social Security benefits based on the age you start claiming them.

5. Protect your family. I remain amazed by how many families I speak with that don’t have term life insurance. Honestly, I don’t get it. If anyone is dependent on your income, you need life insurance. It’s really that simple. For the vast majority of families, all they need is term life insurance, rather than more expensive permanent life insurance. And it is very affordable. For example, the monthly premium for a healthy 40-year-old male who takes out a $500,000 term life policy for 20 years would be less than $50. That’s a whole lot of peace of mind for a relatively small sum. You can learn more at www. selectquote.com and www.accuquote.com.

6. Live below your means, but within your needs. When you are about to buy something or borrow a certain amount, find a quiet place to ask yourself: Do I need to spend (or borrow) this much, or could I meet my needs by buying something less expensive? Whether you are contemplating buying a new home, a car or a television, or planning a home remodel, spending only what you need to spend—not what you can spend—is the key to building financial security this year, and every year. C

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By Suze Orman

FOLLOW MY CHECKLIST of six smart money moves you can set up today and I promise you that by the end of 2014 you will have increased your financial security.

1. Pay as you go. Using cash or a debit card without overdraft protection means you will limit yourself to spending money you actually have. That’s smarter than using a credit card and charging more than you can afford to pay off in full at the end of the month.

2. Pay yourself first. Set up automated deposits into a savings account for any goal(s) you have, such as increasing your emergency fund or saving up for a car down payment. The deposit should occur at least once a month. Putting this on automatic means you can’t talk yourself out of skipping a month. How much to save each month? That’s up to you. My challenge: Choose an amount.

Write it down. Now add 10 percent more. Have that amount deposited in your savings account for at least three months. I bet that if you stand firm and try this, you will find you can stick with it. If you use online banking, give your account a name such as “My Emergency Fund” or “My Car Down Payment Fund.” Labeling accounts helps you stay focused on saving for a goal.

3. Boost your retirement savings rate by one percentage point. Whatever you are saving today, increase it by at least one percentage point for next year. Why just one percentage point? Because there is no way you can tell me with a straight face that you can’t afford to try this. Then, in 2015, add another percentage point. And keep at this until you are saving at least 10 percent of your income for retirement.