I’ve listed a few pieces of generic advice that you may not want to follow.
1. Save 10% for Retirement. This is a common rule of thumb. Saving 10% of your income will probably work for most of us. Some people will need to save more or less depending on their financial situation. If you don’t have a lot saved, or are not expected a pension, then you may need to save far more than 10%. You may be someone that is and will be very frugal in retirement. Perhaps you have reduced all your debts prior to retirement. So you may need far less savings than most of us.
The point is, develop a financial plan with your advisor, discover what you need to save, and get busy. Put away the right percentage for you.
2. Avoid Credit Cards. The saying goes, “guns don’t kill people, people kill people.” You could say the same about credit cards, “credit cards don’t cause debt, people cause debt.” It’s when they are abused that they are a problem. Credit cards are not bad if they are used as a tool. They will allow you to carry less cash and travel safely. If you think you might be prone to abusing them, by all means cut them up into little pieces.
3. You Need Life Insurance. Most of us need different types of insurance to protect our belongings, our health and our income. Not everybody needs life insurance. In my opinion, life insurance serves two purposes. First, to replace income lost due to a death of a spouse or parent. Second, to replace a portion of an estate lost due to estate taxes. So the first being the most important. If your family or children depend on your income, do yourself a favor and buy some life insurance. You don’t want your spouse or kids to face financial destitute because of poor planning.
If you have assets that will convert to income and support a survivor’s lifestyle, then you probably don’t need life insurance. Life insurance is not supposed to be a big payoff when someone dies or thought of as an investment. Stick with term insurance.
4. Use Your 401(k) to Pay off Debt. I’ve written about this before. I am absolutely against this. There are far more ways to retire debt without crippling your retirement savings. You can get another job, practice austerity or sell some of your garage junk. To be honest, no one should be giving you this advice in the first place, it’s just dumb and it’s harmful. By sacking your 401(k) for debt, you’re now debt free, but you’re behind on retirement.
Bad financial advice is everywhere. Be cautious when getting advice. Make sure it is given after a careful examination of your unique financial situation.