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Be Wise With Money

Four To-Dos to Help You Keep Up With Life's Changes

As the saying goes, "The only constant in life is change." The fact is, life is full of major events that can be game-changers. Graduating from college and starting a career. Getting married and starting a family. Becoming empty nesters and starting retirement.

While all of this is going on, something else is happening. Your financial needs are changing, too. The good news is you can take some simple steps to help keep pace with your financial needs. Start by answering these important questions.

1. Are your loved ones protected?

Even if you have an existing contract, your life insurance needs tend to change as you get older. Reevaluate your coverage along the way so you can adjust it, as needed. For example:

When you're young and single, you may want to protect your future insurability and take advantage of lower rates. Down the road, if you get married and have a family, you may want to protect them if you die unexpectedly. That could include replacing your income and sending the kids to college. When you are approaching retirement, it's time to protect your assets along with supplementing your retirement income and leaving a legacy.

If it's been awhile since you checked to see if the people you love are still protected:

  • Use an online calculator to estimate how much insurance you may need based on your life stage.
  • Consider scheduling an annual insurance checkup to find out if you and your loved ones are adequately protected. You can also discuss other insurance options in addition to life insurance that may meet your needs.

2. Are you prepared for unexpected financial setbacks?

An unplanned expense like a major car repair, taking a sick pet to the vet or an emergency trip to the dentist often leads to a four-letter word: debt. One way to help avoid financial setbacks is to build an emergency fund.

  • The best places to stash emergency cash are typically savings or money market accounts. You won't earn a ton of interest, but that's not the goal with this money. Quick access is more important.
  • A general rule of thumb is to save enough money to cover about three months' worth of expenses, plus a small cushion.

3. Are you making wise decisions with your investments?

It's tempting to chase the latest investment fads, but most financial professionals recommend staying the course with your hard-earned savings.

Rather than trying to time the markets, create a long-term strategy – and review it at least annually. You'll want to make sure it stays on track with your:

  • Long- and short-term goals.
  • Risk tolerance level. (This may have changed since you last met with your financial professional based on your life stage, financial situation, etc.)
  • Age and how long you have to prepare for retirement and other financial objectives.

4. Are you saving enough for retirement?

Whether your retirement is decades away, just around the corner or somewhere in between, you know it's critical to start – or continue – to save now.

  • Create an overall financial strategy that's customized around your individual goals and values. Your strategy should also address common risks all retirees face, like medical expenses, inflation and running out of money.
  • Calculate how much you may need to save. The average length of retirement is 18 years.1 Would your savings last that long?
  • Take advantage of your employer-sponsored retirement plan (if one is offered). Your employer may match your contributions up to a certain amount, which will help grow your assets. Also, your pretax contributions may lower your taxable income for the year.

Being prepared financially for whatever comes your way can make the good times better. And the challenging times easier to handle.

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