SAN BENITO — Start early.
That’s what financial planners say to young people who are just starting to save for their retirement.
Financial freedom is important, said Colby Cox, a Global American Financial Executive who works with PTT Financial in Harlingen.
“Everything you do today, affects tomorrow,” Cox said.
He and his colleague, Leticia Romero, PTT Financial Marketing Director, spoke to the San Benito Chamber of Commerce last week about how everyone can attain financial success.
The first thing one must do is set a stable foundation.
“A financial plan is like building a home. You have to plan it, implement it and complete it,” Cox said. “If you don’t have a financial plan, you have no foundation for financial growth.”
In the financial world, the foundation is insurance.
Cox recommends those looking to secure their financial future start by protecting income and assets through a life insurance policy.
“It’s not just for dying,” Cox said. Policies now-a-days have more flexibility to where funds can be used while the person is alive.
Each family should set aside about six months of income for emergencies. This, Cox said, is something most people don’t do, but they should.
“Being prepared for emergencies before they happen is a critical component,” Cox said.
Another is to plan ahead and build a nest egg.
“Start a budget. What you want versus what you need,” Cox said.
Investing
There are two ways people invest their money.
One is through the stock market.
Cox said this is one way people make money but it’s also easy to lose money. After the market crashed in 1994, consumers wanted a better way to invest their money.
This led to what Cox called indexing.
You could put $100,000 in the stock market and someone else put that same amount in an index program. The market goes up 10 percent, both make money and everyone is happy.
“In the second year, the market drops 15 percent, people on the market lose 15 percent of their money while the person on the index program stays where they are at,” Cox said.
To protect persons in an index program, these are usually capped at a certain amount.
Middle America cannot afford to lose its money in the stock market, Cox said.
Retirement
Most people say they want to retire at about 60 to 65 years old. The average for women is 63 and for men its 67.
Cox said the average family needs about $5,000 a month to maintain their standard of living.
“When you retire you stop bringing in a steady income a month but you still need to pay yourself,” Cox said.
After retirement, the average a person will live will be about 85 or 90.
In order to pay oneself $5,000 in retirement, a person would have to save about $887,000 by the time of retirement.
“The most important thing is you have to get started,” Cox said. “If you never start, it will never finish and you will continue to work.”
TIPS
Start saving early
Save more money per month
Index investing
Follow a budget
