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This is the second in our series, "Five Questions," a regular ReZoom.com Finance feature showcasing the expert opinions of some of the country's great financial minds.

With a patience that points to his first career as an English teacher, Robert Brokamp has spent the past decade warning boomers that their retirement years will be quite different from what their parents experienced. Now, as editor of the "Rule Your Retirement" service for The Motley Fool, Brokamp was nice enough to share his thoughts on effective savings.

1. What do you think is the biggest financial challenge that baby boomers face?

The biggest challenge is summoning the motivation to learn about all this stuff. It can be boring, time-consuming and confusing. Who wants to spend free time learning about something named after a section in the IRS tax code? But an ounce of education is worth a portfolio of lower taxes, reduced fees, better investments and peace of mind. Sure, you could pay someone to do it for you, but you'll pay an awful lot for that help – and you have to know at least enough to determine if you're getting good help.

2. Are you familiar with the term "bag lady syndrome," the idea that single women aged 40 and over are suddenly panicked at the idea of not being married and, having never learned the financial tricks that men supposedly did, not having any money saved after they retire?

Indeed, I am. Here's a snippet from an email I received from a subscriber just the other day: "We (women, older) of modest means are not bereft; but we greatly fear being a Bag Lady." Since women earn approximately 75% as much as men yet live an average of six years longer, some women must sustain longer retirements on fewer resources. The simple solution is, of course, to work longer. That also means single women should consider delaying their Social Security benefit, which increases approximately eight percent annually for every year a beneficiary puts off receiving those checks. A guaranteed eight percent return is nothing to sneeze at.

Waiting until you make more money to save is like putting off your diet until the holidays. If you can't resist the temptation now, how will you do it when even more goodies are close at hand?

- Robert Brokamp

 

Money contributed to a medical flexible spending account not only goes in before income taxes are taken out (essentially an income tax deduction), but that money is also not subject to payroll taxes, also known as FICA or Social Security taxes. That's an even better deal than a 401(k), which is also free of income taxes but still subject to payroll taxes.

The money in a flexible spending account can be used, tax-free, for co-payments, prescription eyeware, pain relievers, antacids, dental work and deductibles, to name just a few of the hundreds of eligible expenses. Someone in a combined federal and state tax bracket of 30% could save $376.50 on the annual tax bill. That is, the person could save $376.50 for every $1,000 contributed to the account. If a person contributes $2,000, the tax savings doubles to $753.

There is a "use it or lose it" component to these accounts, so don't contribute more than you think you'll spend in a year. Also, coordinate big-ticket procedures with a year in which you make a big contribution to your FSA. Just make sure you check with your particular plan to make sure the procedure is covered. Most cosmetic operations aren't – no tax break for your tummy tuck.

4. What's the most popular excuse you hear among people who do not save?

A neighbor was telling me about his financial woes. Even though his income had risen 50 percent over the past few years, he had tens of thousands of dollars worth of credit card debt. I asked him if he had considered spending less, paying off the debt and saving more. He replied, "Nah, I'll just find a way to make more money."

As stated by Parkinson's Law, "Expenses rise to meet income." Waiting until you make more money to save is like putting off your diet until the holidays. If you can't resist the temptation now, how will you do it when even more goodies are close at hand?

5. What experience did you have that made you want to dispense advice about personal finance?

I was an elementary school teacher in Washington, D.C., earning about $20,000 a year. I figured I had to be as smart as possible about money, so I read several books, saying to myself over and over again, "Why didn't anyone teach me this stuff earlier?" I thought I could make a job of it by becoming a full-service broker with a big-name Wall Street firm. But the brokerage industry is more about sales than education, in hot pursuit of the "affluent" client. So I joined an organization, The Motley Fool, that is really all about helping everyone regardless of net worth.

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