Q.Even though we're told the recession is officially over, it still doesn't feel that way for many people. Is that why you call this a "scary economy?"
A. If anything, what we've learned coming out of the recession is that it's not an event, it's a process.
Some of it is driven by the market's volatility, even if you're not an active (stock) trader. If you've got retirement accounts with (exchange-traded funds) or target-date funds, the volatility is scary.
Q. To feel in control, you recommend that consumers first create a "financial road map." Can you elaborate?
A. The most important number people need to know is, how much do I need to be saving to get to my retirement goals? Half of all Americans have never run the numbers on what retirement will cost, what they'll need to live on month to month.
You start there. Figure out what you've got, what you'll expect from Social Security, your rate of return on investments and savings. Don't assume you'll earn the 12 percent a year that you could during the market's heyday. Plan on a conservative 6 percent in a diversified stock portfolio over the long term.
Go to the "Ballpark E$timate" retirement calculator at http://www.choosetosave.org. It's not the most elegant retirement calculator out there, but it's very easy to maneuver and asks the right questions.
If you feel like you can't do that, pick up the phone and get some help. I'm a fan of certified financial planners, and fee-only financial advisers. Or if you already have an accountant, [have a chat]. The important thing is to do it.
Q. Is your advice different for those in their 20s and 30s, as opposed to those in their 50s and 60s?
A. The most important thing for 20-to-30-year-olds is just saving as much as they possibly can in IRAs, 401(k)s or (other) vehicles. Savings give you options down the road. There's so much research in behavioral finance that says the very best way (to save) is to make a good decision once. Set up automatic payroll deductions so you don't see the money coming out of your paycheck. With a 401(k), you're aiming to save as much as you can to reach (your employer's) matching dollars. Or save 10 percent of your monthly paycheck.
Q. Paying down debt is one of your mantras. Where to start?
A. If you haven't dropped down every interest rate on your credit cards or refinanced your car loan or your mortgage, do so. It's money in your pocket.
If you don't have the credit score to qualify for lower interest rates, you have time to work on it. With credit cards, stay current on monthly payments, pay down the debt so your utilization rate improves, don't apply for new cards, don't close old credit cards. They all play into the mix.
Q. To rent or buy. How do you decide what to do in this crazy housing market?
A. If you're not going to be there five years or more, I'd rent. If you are going to be there at least five years, look at what it costs to rent versus buy in your part of the country. You need that time horizon to weather the ups and downs. The appreciation may not be there. I bought in May 2005 (in Westchester County, N.Y.) and I was right at the peak. So if I sold today, I wouldn't recoup. But I'm not leaving.
Q. You've got one teen in high school and one going off to college this fall. What are your money guidelines with your own kids?
A. My kids have debit cards and have been managing them online for a while. That's how I transfer money to them, an electronic allowance, so to speak. With their cards, they don't have overdraft protection. If they run out of money, the transaction is denied.
For college, I will probably add my son as an authorized user to one of my credit cards and make sure it reports to the credit bureaus (to build up his credit score).
Q. Now that the Supreme Court ruling upheld the Affordable Care Act, what should consumers be doing to help lower their health care costs?
A. People should be shopping around for health care policies. They shouldn't believe the deal offered by their employers is the best one. For some families, it's better to have one spouse on one employer's plan and the other on a different plan.
I'd start with EHealthInsurance.com, which has (a large) selection of policies. You can get a sense of rates in your state and figure out if you can get a better deal shopping outside your employer's plan.
Q. Reverse mortgages are getting scrutiny by the new Consumer Financial Protection Bureau, which is concerned that some seniors may not understand what they're getting into. Any advice on reverse mortgages for those over 62?
A. I think they're certainly not a panacea. They tend to be expensive. You've always got to ask if you'd be better off by trading down to a smaller house or moving to a city that's less expensive. Take a look at your options.
If your parent is considering a reverse mortgage, go with them (to the mandatory HUD-required counseling session). Reverse mortgages are complicated. Be sure everyone in the family understands.