Do-It-Yourself Financial Freedom

9. Put off reverse mortgages. When you turn 62, salespeople come out in force, urging you to strip the equity out of your home to support your spending now. Don’t do it. The fees and effective interest rates are high, and the proceeds are low. Save the reverse mortgage option for your late 70s or early 80s, when other money might be running low. AARP has tons of good information at www.aarp.org/money/personal/reverse_mortgages/.

10. Annuities. When you’re retired, there’s nothing like receiving a regular check. One way to get it is with an immediate annuity. You take a sum of money and use it to buy an income for life. Your state of health doesn’t matter. The fixed payments are based entirely on your age and the type of benefit you want (for cost comparisons, see www.immediateannuities.com). But fixed payments will be whittled away by inflation, so don’t buy an annuity too early. Buy in your late 70s or early 80s, when they won’t have to last as long.

Stay away from the fancy, tax-deferred annuities that make big promises about future income benefits. They’re too complicated to dissect here, so I’ll say only that the cost is much higher than you think and the odds are good that they won’t perform as you expect. My personal rule is, “if it’s complicated, forget it.” Deferred annuities with income benefits fit that bill.

11. Work with a financial planner. Planners are very helpful in working with budgets and projecting how much you can afford to spend when you retire. But work with fee-only planners, who don’t sell products and who charge only for their advice. Planners who take commissions on products could steer you wrong (for example, by selling you those awful, complex annuities). Three places to find a fee-only planner near you: GarrettPlanningNetwork.com, the Alliance of Cambridge Advisors, and the National Association of Personal Financial Advisors.

12. Move in with your kids. The last resort, if all else fails. That should be motivation enough to get moving on your own plan for financial success.

Jane Bryant Quinn is a financial columnist and the author of Making the Most of Your Money Now.