November is Long-Term Care Awareness Month – a month dedicated to educating the public about the need to prepare for the potentially devastating costs of long-term care. And the more you know about these expenses, the better prepared you will be to deal with them.
To begin with, just how expensive is long-term care? Consider this: The average cost for a private room in a nursing home is more than $87,000 per year, according to the 2014 Cost of Care Survey produced by Genworth, a financial-services company.
And the average cost of an assisted living facility, which provides a level of care that is not as extensive as that offered by a nursing home, is $42,000 per year, according to the same Genworth study. All long-term care costs have risen steadily over the past several years, with no indication that they will level off.
Whether you have young children or not, you’re probably well aware that Halloween is almost here. However, despite the plethora of skeletons and ghosts you might see floating around this week, you probably don’t have much to fear (except, possibly, running out of candy). But in real life, some things genuinely are frightening — such as “scary” investment moves.
You won’t see it on the calendar, and it doesn’t inspire any greeting cards, but National Save for Retirement Week is here again. The goal of this week is self-explanatory, but what does it mean to you? Are you vulnerable to the possibility of reaching retirement without sufficient financial resources? If so, how can you ease this risk?
Let’s look at the “vulnerability” issue first. How prepared you’ll be for retirement — or at least how prepared you think you’ll be — seems to depend, not surprisingly, on whether you are currently participating in a retirement plan such as a 401(k) or an IRA. Consider these statistics, taken from the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey:
If you work for a medium-to-large company, you may now be entering the “open enrollment” period — that time of year when you get to make changes to your employee benefits. Your benefit package can be a big piece of your overall financial picture, so you’ll want to make the right moves — especially in regard to your employer-sponsored retirement plan.
Take a close look at your 401(k) or similar plan, such as a 403(b), if you work for a school or a nonprofit group, or a 457(b), if you work for a state or local government. And keep these possible moves in mind:
As an investor, you may find that the elements of your portfolio that seem to draw most of your attention are stocks and bonds. After all, these investment vehicles, and others derived from them, provide you with potential growth and income opportunities — which is why you invest in the first place. Yet, you also may find significant value in a more humble financial asset: cash. In fact, you might be surprised at the various ways in which the cash, and cash equivalents, in your portfolio can help you complete your financial picture.
One way to understand the uses of cash is to look at the “USES” of cash. In other words, consider the acronym USES:
The kids are back at school and summer vacations are now just fading memories, so it must be autumn. But the seasons don’t just move on the calendar — they also change in your life. And, speaking of changes, you’ll have to make many of them as you move through the years — and that includes changes to your investment portfolio. But how will you know when it’s time to take action?
Just as Mother Nature sends out “signals” to indicate a change in seasons — blooming flowers, falling leaves, warmer or colder temperatures, longer or shorter days, etc. — your portfolio will frequently “tell” you when you need to make adjustments. Here are a couple of indicators you may want to heed:
As an investor, you’re well aware that, over the short term, the financial markets always move up and down. During your working years, you may feel that you have time to overcome this volatility. And you’d be basing these feelings on actual evidence: the longer the investment period, the greater the tendency of the markets to “smooth out” their performance. But what happens when you retire? Won’t you be more susceptible to market movements?
You may not be as vulnerable as you might think. In the first place, given our growing awareness of healthier lifestyles, you could easily spend two, or even three, decades in retirement — so your investment time frame isn’t necessarily going to be that compressed.
It probably doesn’t happen as much as you’d like, but from time to time, you have some extra disposable income. When this happens, how should you use the funds? Assuming you have adequate emergency savings — typically, three to six months’ worth of living expenses — should you pay off debts, or fund your IRA or another investment account?
There’s no one “correct” answer — and the priority of these options may change, depending on your financial goals. However, your first step may be to consider what type of debt you’re thinking of paying down with your extra money. For example, if you have a consumer loan that charges a high rate of interest — and you can’t deduct the interest payments from your taxes — you might conclude that it’s a good idea to get rid of this loan as quickly as possible.
Are you ready for this? September is National Preparedness Month. Sponsored by the Federal Emergency Management Agency (FEMA), National Preparedness Month seeks to educate Americans on preparing for natural disasters and other types of emergencies. But you’ll also need to prepare for unexpected events in many other areas of your life — particularly those events related to the financial security of you and your family.
Here are some of the most important of these events, along with possible preparations for them:
On Sept. 8, we observe National Grandparents Day. If you have grandchildren, they will hopefully mark this occasion by sending a card, making a call or, best of all, paying a visit. But however your grandchildren express their feelings for you, you undoubtedly have a very big place in your heart for them. In fact, you may well be planning on including your grandchildren in your estate plan. If that’s the case, you’ll want to do the best you can to preserve the size of your estate — without sacrificing the ability to enjoy life during your retirement years.