Photo: Image courtesy of Carmen Wong Ulrich
Personal finance expert Carmen Wong Ulrich has been talking about money since she was a little girl growing up in Harlem, N.Y. and New Hampshire. “My dad was an IT guy, and he paid a lot of attention to finance and investing, even though we didn’t have a lot of money,” said Wong Ulrich, whose latest book, The Real Cost of Living, targets families young and old.
“Every time there was a recession, we’d get hit pretty drastically. We had a family pow wow when my father explained he was taking out a second mortgage.”
Today, Wong Ulrich is a respected author, TV and print journalist, and the president of ALTA Wealth Management. She shared with us the biggest mistakes Gen Xers make on the road to retirement:
They put too much money into college. With student loan debt hitting the trillion dollar mark, this is obviously the biggest concern keeping people up at night. But not every student graduates in four years, so parents need to stop thinking they have to foot the whole bill. “If you tell people you don’t have to save up the whole thing, and think about who your kid is, that’ll increase the ROI a lot,” says Wong Ulrich.
In other words, tailor the experience for each child, so that you only spend on the one who’s truly committed. “Instead of making them do the same thing, have one take classes at a community college, figure it out, and work while they can,” she says.
They don’t plan for supporting ageing parents. “A lot of folks are having to take care of ageing parents and needing to talk them about money,” Wong Ulrich says, so if you haven’t had “the talk,” do it now so it’s not a surprise. “Once they get older, a lot can go wrong and they can wind up being deprived,” she says.
They invest with emotion. Wong Ulrich rarely sees investors behave rationally, especially when they perceive a threat to their nest egg. The problem is, you shouldn’t just set it and forget it, nor should you “fiddle around,” making changes every time you get scared, she says. They also shouldn’t depend on their employer to fund their retirement.
They forget to update their insurance. “Folks tend to choose and buy their insurance policies when they start working, and then they never update them,” Wong Ulrich says. “One client with a serious illness found out she hadn’t brought up her disability coverage since she started 15 years earlier.
They don’t keep the big picture in mind. Advocating a “holistic approach” in which investors examine all aspects of their financial lives, Wong Ulrich says Gen Xers shouldn’t look past long-term care insurance and alternative investments as retirement draws near. “You can save all the money you want, but if you lose your job where’s the income going to come from? How much life insurance do you have? Check everything so you know what you need to care of,” she says. “You want to make sure that you don’t lose what you already have: your house, your lifestyle, all of that.”
They don’t teach their kids about money. “The biggest gift that you can give your kids is the gift of financial education,” says Wong Ulrich. “Get them books or whatever, but really talk about money and continuously educate yourself because that’s going to be our way of making life cost less.”