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Fitness: A Lifetime of Financial Growth Managing For A Lifetime Of Financial Growth As mentioned earlier, you
probably will experience several major events in your life that can make
it more difficult to start or keep saving toward retirement and other
goals. The key is to have a clear plan, to stay focused on your goals,
and to manage your money so that life events don't prevent you from keeping Here are a few suggestions for saving for retirement while financially managing some common life events. Marriage. Getting married creates new financial demands that compete for retirement dollars, such as changing life insurance needs and saving to buy a home. But it's usually less expensive for two people to live together, thus freeing up dollars. Also, you probably still have time on your side A spending plan is essential. Remember, every little bit helps. Raising children. The U.S. Department of Agriculture estimates that it costs the average American family over $200,000 to raise a child to age 18. Furthermore, in some cases a spouse may stay out of the workforce to raise children, thus cutting into income and the opportunity to fund retirement. Having a child may alter your major financial goals, but should never eliminate them. Make the best effort you can. Also, many financial planners stress that saving for retirement should have priority over saving for a child's college education. There are financial aid programs for college-bound students but not for retirement. Changing jobs. It's estimated that the average worker changes jobs 10 times and careers 3 times in a working lifetime. Changing jobs often puts you at risk of not vesting in your current job, or a new job may not offer a retirement plan. Consider rolling money from an existing company retirement plan into a new company plan or an individual retirement account (IRA). Don't cash out and spend the money, however small the amount. Divorce. It's important that you know the laws regarding your spousal rights to Social Security and pension benefits. Under current law, spouses and dependents have specific rights. Remember, retirement assets maywell be the biggest financial asset in the marriage. Be sure to divide those assets carefully. It's also critical to review your overall financial situation before and after your divorce. Income typically drops for partners in the wake of a divorce, particularly for women. Disability. A severe or long-lasting disability can undermine efforts to save for retirement. Although Social Security Disability benefits can help sustain a family if severe disability strikes, you may wish to explore the availability and cost of other forms of disability insurance. Death. The premature death of a spouse can undermine efforts for the partner to save for retirement, particularly if there are dependent children. That's why it is important to check your Social Security statement to find out how much children will receive if a parent dies. Maintaining adequate life insurance is also important. Be sure that you have properly named the beneficiaries for any insurance policies, retirement plans, IRAs, and other retirement vehicles. Coping With Financial Crises Life has a way of throwing unexpected financial roadblocks, detours and potholes in our path. These might be large medical bills, car or home repairs, a death in the family, loss of a job, or expensive legal problems. Such financial emergencies can derail your efforts to save for retirement or other goals. Here are some strategies for managing financial crises. Establish an emeryency fund. This can lessen the need to dip into retirement savings for a financial emergency. Building an emergency fund is tough if income is tight, but every few dollars help. Fund it with pay from extra working hours or a temporaryjob, a tax refund, or a raise. Put the money into a low-risk, accessible account such as a savings account or money market fund. Insure yourself. Insurance protects your financial assets, such as your retirement funds, by helping to take care of the really big financial disasters. Here's a list of insurance coverage you should consider buying:
Borrow. If you must borrow because of a financial emergency, carefully compare the costs of all options available to you. Sell invesments. It's usually advisable to sell taxable investments first. Try not to touch your faster growing retirement accounts. Taking money out of your retirement accounts could trigger income taxes and penalties.
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