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AARP The Magazine

Take Charge of Your Money at 50+

Your savings. Your salary. Your spending. Your investments. AARP financial ambassador Jean Chatzky puts it all in perspective

What We Spend

the plan for how you spend

1. Enroll in Tuition 101

If you’re sending a child to college soon, note that a year at a four-year college averages about $22,000, more than twice the average a few decades ago.

To avoid sabotaging your retirement, says Maryland financial planner Tim Maurer, study ways to bring costs down. Mix two years at a community college and two years at a state university; apply for financial aid and scholarships; float the idea of living at home.

“If you live at home and go to a state university, you can get a four-year degree for the cost of the first semester at Harvard,” Maurer says.

2. Reimagine your life (insurance)

Maybe you’ve had the same life insurance since you bought your first house or had a baby. Now your mortgage is almost paid off and that baby is 6 feet 2. It’s time to think about how much longer you’ll need the coverage. If it is more than a few years (or beyond the expiration of your current level term policy), you might want to act soon, says Stephen Rothschild of the LIFE Foundation.

The younger and healthier you are when you shop for a new 10-year or 20-year level term policy, the better the rate. If you’re no longer healthy or want to keep the coverage forever (perhaps to provide for a special-needs child), look into converting your current term life coverage to whole life, which is more expensive but includes an investment component; no new physical will be required.

To better judge your needs, run your numbers though a life insurance calculator, such as the AARP Life Insurance Calculator.

3. Look long-term

Considering long-term care insurance? Buy it now. These policies can work for people worth more than $500,000 (not including a house) — which is too much to easily spend down to qualify for Medicaid, but less than the $3 million it would take to fund their own continuing care.

You’re less likely to be rejected for health reasons if you apply now. Premiums will be lower, too: Think at least $150 each a month for a couple at 50 for a policy that pays $200 daily for three years, with inflation coverage. The median cost of a year of nursing-facility care is now $76,000; in 30 years it could be $300,000.

Jean Chatzky, AARP’s financial ambassador, is a best-selling author and an award-winning personal finance journalist. With additional reporting by Arielle O’Shea.

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