While the headline is all in fun, hidden “skeletons” in your financial closet could seriously impact your financial well being, including threatening your retirement.
No matter what your income level is, anyone can be knocked out of their fiscal security, reports a recent article in The Kansas City Star, “Financial skeletons to clean out of your closet.” Even one skeleton in your financial closet, could throw off a lifetime of saving.
First, you may want to track your spending for a few months to get an idea of what you spend. See if there are luxuries posing as necessities, and then look at each item as a need vs. a want. Next, create a budget that works with your income. Include savings and build an emergency fund of at least three months of living expenses.
The U.S. Census Bureau data shows that the average American household owes more than $16,000 in credit card debt. If you ad student debt and mortgages, that debt may really be suffocating some families. Determine your net worth, check your credit report, don’t take on more debt and create a repayment plan.
Most Americans will have to fund their own retirement, or at least contribute significantly to it. However, many aren’t saving enough to cover their future needs. See if you can get an employer match and save at least that much in your 401(k) account. You can consider an IRA or other savings/investment vehicle.
Estate planning lets you consider the legacy you’d like to leave to your family and addresses who gets your property when you die. It also covers the best legal transfer methods for leaving your property, designating a guardian for your minor children and naming who should make medical and financial decisions for you, if you’re incapacitated. Partner with an estate planning attorney to create a sound estate plan.
As baby boomers get older, more of our nation’s seniors will need home care or care at a long-term care facility. The cost of long-term care can range from $30,000-$70,000 a year or more, depending on the needs. Long term care insurance may be an option, so talk to your attorney about this.
To prevent any of these skeletons from rattling around in your financial closet, make sure to put a financial and estate plan in place. Don’t forget to include risk management, which encompasses estate planning and insurance.
Reference: Kansas City Star (October 27, 2017) “Financial skeletons to clean out of your closet.”