Jul
09
Congress just passed some financial reform laws lately, but given the shaky economy, many people are still worried about protecting their financial futures. Here are some ideas to put your mind at ease:
Income Protection will make sure you have enough money for basic living expenses in emergency situations.
- Life insurance. If your family relies on your paycheck, you need life insurance.
- Disability insurance. If you and your family would be financially devastated if you were unable to work, you need disability insurance.
- Emergency funds. If you’re retired, have five years’ worth of living expenses that you expect to be covered by portfolio distributions in cash, CDs, or short-term bonds. If you’re not yet retired, shoot for enough cash savings to cover three to six months’ worth of living expenses.
- Build Your Skills’ Net Worth. You can’t depend on cost of living increases to increase your income over time. If you want to get ahead in your job, and be promoted. Think about ways to increase your skills, your value to your employer, and your worth in the marketplace. Community colleges and local seminars will keep you up to date in your industry.
Make Sure Your Legal Documents are In Order. Having the right, updated documents — legal and otherwise — will keep more wealth in your family and save a lot of heartache during times that are already very difficult:
- Updated will. Yeah, you’ve heard for years how you need to have a current will. Don’t put it off any longer. If you die without a will, the state government typically handles distribution of your assets and this could take years and cost a lot of money. There are many online software companies to help you make one. Make sure your will has been updated to reflect changes in family composition and recent acquisitions of property. Once you’ve written a will, to make it binding, all you need is a notary.
- Advanced medical directive. This legal document describes the medical care you wish to receive (or not) if you are no longer capable of making those decisions. Having a current one could save your estate thousands of dollars by preventing unnecessary end-of-life medical treatment.
- Durable power of attorney. This will allow someone you appoint to make financial or medical decisions on your behalf if you become incapacitated.
- Trusts. For tax benefits, having trust can be very helpful for those you wan to inherit your wealth. If you don’t have large assets to protect, most likely you don’t need one.
- Updated beneficiary information. Because of divorce or family feuds, you want to make sure that your beneficiaries for your insurance policies, accounts, and retirement benefits reflect your current wishes.
- List of where you keep everything. This can be the most important part of the list. To avoid panic and delays in handling your wishes, your family needs to be able to access trusted advisors (attorneys, accountants), legal documents, insurance policies, safe-deposit boxes, and so on.
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