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Seeing retirement clearly

By Jennie L. Phipps · Bankrate.com
Thursday, May 26, 2011
Posted: 2 pm ET

Retirement planning is a challenge worldwide.

The world's population of people older than 65 will increase from 550 million today to more than 1.4 billion by 2050, according to a report by HSBC Bank published today.

The white paper also said that people everywhere have blinders on about this issue. They know they are going to live longer than previous generations and traditional pensions, and programs like Social Security are going to offer shrinking benefits in the coming years, but they are failing miserably to save enough money to live on.

"Both Europe and North America are reaching a critical stage as the first cohorts of baby boomers now approaching retirement, and in Europe this will see the working-age population start to shrink from 2012 onward," the report said.

I also read a speech this morning that financial journalist Knight Kiplinger gave at Auburn University. He offered advice to graduates that seems just as relevant to those about to make the transition to retirement. And certainly, it is an appropriate antidote to problems cited by HSBC.

  • Invest in yourself. Keep your earning power growing through continuous education, training and personal development.
  • Protect yourself and your loved ones. Buy enough insurance to protect against the big risks.
  • Borrow sparingly. Use credit to buy things of lasting value like an education, a home, a business -- maybe a car. Otherwise, pay cash.
  • Pay yourself first. Save first; pay bills second. If there's not enough left to pay the bills, cut your spending.
  • Don't make risky investments. "Don't try to time stock markets because I don’t know anyone who does it well," Kiplinger said.
  • Diversify, diversify, diversify. Don't put all your eggs in one basket.
  • Live simply. "Take a close look at your current lifestyle and try to separate the needs and wants. If you see a lot of spending that is dispensable, consider it found money for the rest of your life," Kiplinger said.
  • Give generously. "Your own financial security depends, far more than you may know, on the financial, physical and spiritual health of others in your community, in the nation, in the world," he said.
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