NEIL:
AH, RETIRING, THE GOLDEN YEARS.
AS IF!
THERE'S A NEW STUDY OUT THAT
SAYS ABOUT HALF OF RETIREES
BETWEEN THE AGES OF 75, WELL,
AND OVER 75, THEY'VE GOT DEBT.
THEY'VE GOT OUTSTANDING LOPES.
TO JACK OTTER ON THAT VERY REAL
REALITY AND HOW, AND HOW THEY
CAN IMPROVE THEIR LOT.
HE'S 74 HIMSELF, BUT ANYWAY, HE
THOUGHT HE'D JUST PREPARE FOR
IT.
GOOD TO SEE YOU, MY FRIEND.
>> THANKS, AND I LOOK PRETTY
GOOD FOR 74.
NEIL: YOU DO, INDEED.
I DIDN'T REALIZE SO MANY WERE
DEALING WITH DEBT THAT LATE IN
LIFE.
NOT THAT IT'S LATE, BUT
PRESUMABLY, YOU'RE SUPPOSED TO
BE AS CLOSE TO DEBT-FREE AS
POSSIBLE.
>> AND IT GETS WORSE, BOSTON
COLLEGE CENTER FOR RETIREMENT
SAID THAT THIS GENERATION OF
RETIREES IS IN SLIGHTLY BETTER
SHAPE THAN THE ONES WHO ARE
COMING.
THE GOOD NEWS IS THOSE YOUNGER
PEOPLE HAVE TIME, BUT, YEAH, IT
IS A REAL PROBLEM.
I WOULD SAY THAT YOU NEED TO
LOOK AT THE DIFFERENT TYPES OF
DEBT.
SO IF YOU'RE STILL CARRYING A
MORTGAGE, IT'S VISIBLE, YOU'VE
GOT A FEW YEARS LEFT, YOUR CASH
FLOW IS ENOUGH TO PAY OFF THAT
MORTGAGE OVER THE REMAINING LIFE
OF IT, THAT'S FINE.
THE THING YOU SHOULDN'T BE
DOING, OF COURSE, IS, SAY,
BUYING STUFF WITH YOUR CREDIT
CARD BECAUSE YOU KNOW WHAT YOUR
INCOME IS, RIGHT?
THAT'S WHY THEY CALL IT FIXED
INCOME, AND IT'S NOT AS IF
YOU'RE GOING TO GET A RAISE IN A
COUPLE YEARS.
SO THAT'S NOT A GOOD IDEA TO BE
ADDING DEBT LIABILITIES.
BUT PAYING OFF THE LAST FEW IN
RETIREMENT BECAUSE, YOU KNOW,
WE'RE STARTING FAMILIES LATER IN
LIFE THESE DAYS.
NEIL: WHAT IF YOU'RE TAKING ON A
NEW MORTGAGE, YOU'RE BUYING A
PLACE, LET'S SAY YOU'RE GOING TO
RETIRE SOMEWHERE, BUT YOU'RE NOT
BUYING IT OUTRIGHT.
YOU'RE GETTING A NEW MORTGAGE,
HOPEFULLY SMALLER THAN THE PLACE
YOU'RE LEAVING, BUT WHAT DO YOU
MAKE OF THAT?
>> THAT ALL DEPENDS ON CASH
FLOW, AND WHATEVER AGE YOU ARE
IF YOU HAVEN'T DONE IT, YOU NEED
THE SIT DOWN, FIGURE OUT -- NOT
EVERYTHING IS KNOWABLE, BUT
THERE ARE SOME KNOWNS.
FOR INSTANCE, PROBABLY WHAT YOUR
INCOME STREAM IS ESPECIALLY IF
YOU'RE RETIRED.
YOU KNOW, SOCIAL SECURITY, MAYBE
A PENSION, MAYBE YOUR SAVINGS,
WHATEVER ELSE IS COMING IN,
THAT'S A NUMBER.
THEN LOOK AT THE NUMBER OF THAT
MORTGAGE PAYMENT, AND IS IT
SUBSTANTIALLY BELOW THE OTHERS
BECAUSE, OF COURSE, YOU'VE GOT
OTHER COSTS TOO.
AND THEN YOU'VE GOT THE UNKNOWNS
LIKE MEDICAL EXPENSES AND SO
FORTH.
NEIL: AND THAT'S A BIGGIE.
PEOPLE DON'T APPRECIATE HOW
EXPENSIVE THAT IS.
>> AND WHAT'S SCARY IS IT'S
VARIABLE.
YOU CAN ESTIMATE FOOD, CLOTHING,
MORTGAGE, WHATEVER.
THE MEDICAL ISN'T.
SO LOOK AT YOUR INSURANCE
COMPANY, FIND OUT WHAT THE
DEDUCTIBLES ARE AND THAT SORT OF
THING.
BUT ANYWAY, BACK TO THE DEBT, IF
YOU ARE LOOKING AT THAT NEW
MORTGAGE AND IT'S NOT A HECK OF
A LOT LESS THAN YOUR INCOME,
THAT'S NOT A PURCHASE YOU WANT
TO MAKE.
NEIL: RIGHT.
>> AND THE REPORT FROM BOSTON
COLLEGE TALKS ABOUT DOWNSIZING.
A REVERSE MORTGAGE IS ANOTHER
OPTION.
I DON'T LIKE THAT UNLESS IT'S AN
ABSOLUTE NECESSITY.
NEIL: YEAH.
HOME EQUITY IN THAT.
>> YEAH.
YOU HAVE TO GET GOOD ADVICE.
ANNUITIES ARE AN OPTION FOR
INCOME.
THEY CAN BE PRICEY, BUT AT LEAST
THEY'RE GUARANTEED.
NEIL: YOUR ASSESSMENT OF HOW
READY THIS LATEST GENERATION IS
THEN FOR THEIR GOLDEN YEARS.
>> WELL, THE PROBLEM, THE
BIGGEST PROBLEM IS THAT PENSIONS
ARE GOING AWAY.
THAT WAS, OBVIOUSLY, A VERY
IMPORTANT LEG OF THE STOOL.
SO NOW --
NEIL: THE DEFINED BENEFIT ONE,
THE GOOD OLD DAYS WHERE YOU GOT
A SET AMOUNT.
>> RIGHT.
SO NOW IT'S UP TO US TO SAVE IN
OUR 401(K)s.
THERE ARE PEOPLE ADVISING YOU ON
HOW TO INVEST IT.
GENERALLY WHAT HAPPENS IS MOST
PEOPLE ARE EITHER TOO
CONSERVATIVE, IT'S ALL IN BONDS
WHICH IS A BAD IDEA, OR THEY'RE
TOO RISKY.
THE CRASH COMES AND THEY SELL IN
A PANIC, SO THAT'S A BAD IDEA.
NEIL: AND A LOT OF THEM STILL
HAVE KIDS THEY'RE TAKING CARE OF
AND HANDLING THEM.
>> YEAH, EXACTLY.
PAYING FOR COLLEGE WHILE AT THE
SAME TIME TRYING TO PAY FOR YOUR
RETIREMENT.
NEIL: I TELL MY KIDS YOUR MOTHER
AND I ARE TELLING EVERYTHING.
FIRST OF ALL, THEY DON'T LISTEN
TO ANYTHING I SAY, SO THE DOG
WILL GET IT BEFORE YOU GUYS,
BECAUSE THE DOG DOES EVERYTHING
I SAY, YOU KNOW?
WHAT DO YOU THINK?
>> WELL, WE ARE PUTTING MONEY IN
529 PLANS FOR THE KIDS, BUT WE
TOLD THEM THAT THEY WILL BE
WORKING SUMMERS AS THEY GET A
LITTLE OLDER TO HELP PAY FOR
COLLEGE.
I'D RATHER NOT HAVE THEM BORROW
ANY MONEY FOR COLLEGE, BUT WHO
KNOWS?
A FRIEND I USED TO WORK WITH,
HER DAUGHTER IS STARTING AT
WELLESLEY IN THE FALL, $73,000 A
YEAR FOR TUITION AND BOARD.
NEIL: IS THAT RIGHT?
>> IT'S A BIG NUMBER.
NEIL: THIS SURVEY CAME OUT FROM
BOSTON COLLEGE --
[LAUGHTER]
NOT EXACTLY ONE OF THE CHEAPER
SCHOOLS OUT THERE.
>> EXACTLY.
NEIL: ALL RIGHT.
I'M GOING TO STILL BE VERY TOUGH
WITH MY KIDS.
>> I HAVE ONE BIT OF GOOD NEWS,
BARRON'S IS FREE ALL WEEKEND, AN
ADVERTISER IS SPONSORING AN OPEN
DOOR, SO ANYONE CAN GET PAST THE
PAY WALL AND READ OUR SITE.
NEIL: IS THAT RIGHT?
>> INDEED.