That’s the plan

Karen Vibe

Can you believe it’s 2008? According to some polls, after getting physically fit, getting our financial affairs in order is the most made (and probably failed) New Year’s resolution. Karen Vibe is a financial planning specialist at Smith Barney. She can be reached at 689-8708, and her website is

First, what should you do if you’re 30 to prepare for your financial future?

It depends on the kind of lifestyle that you want to have when you retire. For individuals who want to maintain their lifestyle, they need to assess how much they spend every month. Ultimately, they need to prepare on a monthly basis or a quarterly basis or at the very least a yearly basis to ensure that they have at least that amount in today’s dollars for retirement. Oftentimes, what happens is people have a certain lifestyle, they have certain bills that they pay, they maintain a certain standard of living, but they’re only putting $100 a month or $200 away, and if you were to sit down with a financial advisor and track that out and say, “How much is this $200 a month going to be in 25 years, they’re going to be shocked to find out exactly how much in today’s dollars it’s going to be. And a lot of people are living longer so people want to retire at 60 or 62 or whenever their Social Security hits, they don’t realize they’re going to live 30 years beyond that. It takes a lot of money.

How does it differ between when you’re 30 and when you’re 40?

Let’s just assume that nobody’s prepared at all. You have to save a lot more money. Time is your friend. The earliest the early person [starts], the younger the person, the smaller amount they have to save to prepare, but the problem is, most people don’t think about it until they’re in their 30s or 40s, and so that “Oh, I’ll get to it next year” sets them that far back when it comes to savings, if they want that [retired] lifestyle. If they want to work until the day they die, then preparing is not going to be an issue.

Yeah, but you may want to work less or your house will be paid off or whatever.

Exactly. People forget that you are never going to feel any better than you do now. You’re only going to get older and more tired. If you don’t start preparing now, just think about how tired you’re going to be when you’re 65, and you have to go work at Albertsons at $10 an hour when you’d prefer to be traveling in Europe.

Suppose you’re 60, and you haven’t done anything?

It’s never too late. To be perfectly honest, I’m working with somebody who’s 70 now. It’s just a matter of taking a piece of her paycheck, and encouraging her to take a match on her 401(k); she’s getting free money. You can still encourage people to start the discipline because she may live to be 100 years old.

What five things should anyone do to prepare?

No. 1 is take action, do something. People actually have to move and do something. I would say budget would be No. 2. Once you’ve done that, you need to do your 401(k). I would say start with 10 percent, and you’ll never miss it. If you’re married and you have children, you need to look at term life insurance. Once you’ve got those going—you have your budget in place, your 401 (k) is going, and you have term life insurance, you need to sit down with a financial planner to see if you’re saving enough.