They say hindsight is 20/20, and with that in mind, U.S. News asked four seniors what they would do to get ready for retirement if they could do it all over again. They provided insight on what they would do differently as well as where they got it right. Based on those conversations, here are 10 financial tips from seniors to the younger generation.
Get an education in finance and business principles. While you don’t need a degree in finance, learning about the basics of business could mean you make better investments. That’s one thing Robert T. King, 65, wishes he had done differently. The Seattle resident had an opportunity to buy real estate in the 1970s, but didn’t take full advantage of it. “While I do own real estate, I likely would have purchased more if I had been a little more confident,” he says. Having a business or finance education may be one way to build the confidence needed to make smart investment decisions.
[See: 10 Ways to Get Ready for Retirement After Age 50.]
Pay off your mortgage early. Bernie Petersen, 67, of Marne, Michigan, didn’t intend to retire at age 57 or begin his Social Security benefits early. However, he found himself doing both when he was laid off at the start of the last recession and unable to find a full-time position in the years that followed. “[People] always say, ‘I’m going to work until I’m 70.’ But will you be able to?” he asks. “That option wasn’t available to me.” While an early retirement meant money was tight, it didn’t require any dramatic lifestyle changes. Petersen credits that to being debt-free and having his mortgage paid off at the time he lost his job.
Rethink maintaining a credit card balance and car loan. Petersen encourages younger adults to reconsider carrying a credit card balance or assuming a car loan as a fact of life. Although he uses a credit card himself — and pays off the balance each month — he calls them “legal loan sharks” and cautions against racking up unsecured debt.
As for cars, Petersen recommends young adults continue making car payments to themselves after a loan is paid off. “Once you get out of a payment, it’s not free money,” he says. Instead, it should be set aside in savings because the car you’re driving won’t last forever.
Follow your heart, even if it gives you a smaller paycheck. For 14 years, Lorraine Shelstad, 74, worked as a missionary in Thailand. “At that time, I didn’t make much money, just a basic living allowance,” she says. While she could have made more money elsewhere, she doesn’t feel like those years negatively affected her retirement. Despite her relatively small paychecks, she was able to put money aside for the future and that, along with a condo sale, has allowed her to live as she likes. Now based in Maple Ridge, British Columbia, Shelstad says putting money aside regardless of your income is key. “I was surprised that I had made much money on small investments,” Shelstad says. “I have even been able to travel after retirement.”
Build wealth, but don’t fixate on the bottom line. Howard Stevenson, a 75-year old Boston resident and author of “Wealth and Families: Lessons from My Life Journey,” says the greatest value in earning and saving money is the options it gives you. “The best things in life aren’t things,” he says. “But having wealth gives you choices.” Money in the bank means you are free to travel, retire early or pursue other interests at will.
However, Stevenson is quick to point out younger people shouldn’t make the mistake of tying their self-worth to the balance in their bank account. “Anyone who equates money with success is probably going to be unhappy because someone else is always richer,” he says.
[Read: Retirement Planning Decisions You Might Later Regret.]
Follow your instincts. There are times in which your gut may tell you to do something, and King says you should listen. “There were a few times I had instincts that would have been highly lucrative if I had followed them,” he says. He doesn’t want younger people to make the same mistake. “If someone follows their ideas and intuitions that might beget opportunities.” Of course, people need to balance those instincts with the amount of risk they can afford to take. When in doubt, conferring with a financial professional can be a smart way to ensure an investment is wise.
Buy good quality items that will last. In today’s world of fast fashion and disposable goods, cheap products are plentiful. However, Shelstad says spending more to buy good quality items can save money in the long run. “I’m still wearing some 1980s clothes,” she says. Buying timeless styles and designs can help ensure your purchases will serve you well for years or even decades.
Don’t confuse an expenditure with an investment. Buying high-quality items that last is smart shopping, but don’t confuse it with making an investment. “There are a lot of places where people get confused about investing,” Stevenson says. Items such as cars and clothes depreciate over time regardless of their quality. Even goods like fine art, which is sometimes sold as an investment, can drop in value as tastes change. Stevenson notes people should be aware that anything that loses value is an expenditure and shouldn’t be counted on for retirement income.
Start saving early. The seniors we spoke to were unanimous: The best financial advice for young people is to start saving early. That’s not only so savers can take advantage of the power of compound interest, but also to guard against unforeseen life changes. “A lot of people assume if one year is good, the next one will be better,” Stevenson says. However, that’s not always the case. Plus, today’s seniors say you will need to have plenty in the bank to supplement Social Security. “[It] isn’t going up anywhere near as much as expenses,” Petersen says about monthly retirement benefits.
[See: 10 Retirement Planning Moves to Make in Your 20s.]
Do what you can to stay healthy. All your hard work preparing for retirement will be for naught if you don’t take care of yourself. “If you haven’t taken care of your health, you can’t work in a physical capacity and your mental capacities are not as sharp,” King says. That could translate into an early retirement or mistakes made in money management. Shelstad says staying healthy doesn’t have to be complex. She recommends this: “Eat well and don’t scrimp on healthy food.”
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10 Things Seniors Want You to Know About Managing Money originally appeared on usnews.com
