Whether you’ve been working hard for 30 years or are just three months into your first job, it’s always wise to plan ahead for retirement. After all, one day you will close the chapter on your career and start the next adventure. But what you get out of tomorrow depends on what you put into it today — and how you handle any bumps along the way.
So, while you’re keeping one eye on that retirement prize, make sure to keep the other on the lookout for pitfalls, like:
- Short-sighted savings
- Career interruptions
- Illness or injury
- Unexpected life demands
Here’s a look at how to possibly prepare for these situations.
- Short-Sighted Savings -This is where proper planning plays a big part. Savings take time to grow, so you may wish to consider saving and investing early to take advantage of compound interest and long-term stock gains if the U.S. stock markets continue their historical upward trend.1 Also be sure to consider multiple avenues for your savings dollar, including:
- 401(k) ― Employer-sponsored 401(k) plans can often be a good way to invest in your future. Many employer-sponsored plans also offer a matching contribution feature. 401(k) plans typically enable you to make contributions out of your paycheck on a pre-tax basis, so you can defer taxation on your income while growing your retirement savings on a tax-deferred basis.
- Individual Retirement Account (IRA) ― Many smaller employers offer an IRA option, or you can open your own IRA.
- Personal Savings ― Many banks offer automatic withdrawals from a direct deposit paycheck into a savings account. Interest rates are a lot higher now than they have been in recent years.
So how much money do you need to save for retirement? Well, the answer is different for everyone. Individual risk tolerance goes a long way in determining how — and how much — to save. Talk to a financial professional to develop a savings strategy tailored for you and your specific circumstances.
2. Career Interruptions
In today’s economy, you can never be sure of your job stability — or of your ability to quickly find a new job. That’s why many believe it’s critical to maintain an emergency fund to cover 6-12 months of living expenses like rent or mortgage and groceries.
If you withdraw money from your retirement savings, especially a qualified retirement plan, you may incur tax penalties on the withdrawals (depending on your circumstances) while also cutting into the account’s value over time.
3. Unforeseen Illness or Injury
According to the Social Security Administration, about one in four 20 year-olds working today will become disabled before they retire. It’s a startling statistic with serious consequences. If you get sick or hurt and have to go on long-term disability, your employer may have the right to terminate your position — and with it, your ability to continue contributing to your 401(k). This can potentially have a considerable impact on your retirement savings.
Many people who become too sick or hurt to work are forced to tap into their retirement savings to meet the expenses of everyday life. A disability income insurance policy not only helps replace a portion of your income when a disability occurs, but it can also be designed to help you continue saving for retirement.
From credit cards to home loans to paying off college education, debt has the potential to derail your retirement plans. When not properly managed, it may lead to low credit scores, depletion of your retirement savings, or even bankruptcy. Unmanaged debt may also make achieving your foundation of retirement planning more difficult and potentially more expensive. The key is to pay down debt while properly balancing it with your other financial priorities.
5. Life Events
You can save early and save often for retirement, but something may happen that puts that savings at risk. Maybe your daughter’s college scholarship falls through. Or your home value unexpectedly declines when you are ready to sell. At that point, you can either toss up your hands and say “That’s life!” (and it certainly is), or you can be thankful you prepared for this obstacle.
Consider planning for the unexpected with a life insurance policy that builds cash value. Of course, one of the most important parts of life insurance is the death benefit, which protects your loved ones by providing a financial benefit when you die. But, instead of digging into your retirement savings to pay for unforeseen expenses, you may be able to access the cash value in the life insurance policy to cover some of these costs.3 Or, later in life you may use your cash value to supplement a shortfall in your retirement income.
Taking the steps ahead of time to prepare for potential and real obstacles can help you enjoy life’s next adventure — retirement.
Workplace well-being transforms every day, so employee wellness initiatives will continue to grow this year. All signs indicate that employee well-being will become a primary focus for employers in 2023. And in a general sense, many organizations will have a renewed focus on employees as people. Employees want to be treated like human beings—not just resources. More than ever, workers want to feel like they belong in the workplace and feel recognized, appreciated and safe. Correspondingly, when employees’ well-being is thriving, they often take fewer sick days, increase their job performance, manage stress better and experience less burnout, all of which directly impact organizations. Thus, employers can yield positive benefits by caring for their people.
Here are four popular employee wellness trends to look out for in 2023.
- Expanded Mental Health Resources
- Advancement of Health Equity
- Increased Focus on Hybrid Work-life Balance
- Expanded Financial Wellness Resources
All signs indicate that mental and financial wellness will become significant pain points in 2023. The pandemic further exposed health inequalities and an unattainable work-life balance for many American workers. The most robust 2023 employee wellness offerings and programs will likely be employee-centered, focusing on how to provide the most comprehensive, attainable and affordable benefits. Many employees will not only need resources for handling mental and financial challenges but also support for working in a remote or hybrid setting with blurred lines between their home and work lives. This year, employers are expected to explore programs and initiatives that ensure all employees have access to the physical, mental and financial benefits they need to address the short- and long-term impacts of the pandemic and the current economic landscape.
Organizations can start by evaluating current wellness initiatives and thinking about ways to improve them. To ensure offerings and investments will resonate with the workforce, it can be helpful to survey employees first and see what they find most valuable and necessary for their overall well-being.
Contact Cleary Insurance, Inc. today for more wellness program ideas or ways to get started.
This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2023 Zywave, Inc. All rights reserved.
Prices are Through the Roof, Literally!
We’ve all seen the impact of inflation on energy costs, at the grocery store and now on your home and auto insurance. Although inflation seems to be settling, the impacts will be felt for years to come. With that being said, we’d like to provide you with some factors as to why you’re seeing such an impact to your home and auto insurance premiums.
- Shortage of workers: The Home Builders Association estimates the number of hired construction workers needed to keep up with demand in 2023 will need to be 740,000, with an additional 2.2 million needed by 2024. This is also causing a spike in labor as contractors are paying more to attract talent.
- Material costs: Costs are up 12% vs. 2022 and 40% since February 2020.
- Safety Codes & Local Ordinance: Your homeowners policy provides coverage to bring out of date items up to code after a covered loss. Homes are rebuilt to current code to ensure the safety for you and your loved ones.
- Loss of use: When you’re involved in a claim and unable to live in your home during construction, coverage that will pay for replacement living and rents are at an all time high.
Manufacturing time delays brought on by the pandemic have led to increased costs for parts, labor and rental vehicles. Below are a few statistics that have impacted auto premiums:
- Technology: Cameras and sensors keep us safe and there’s an additional cost to ensure they are working properly after a collision. Some vehicles now have over 30 devices built into the car.
- Parts: The average increase for parts was 10% in 2022, where in years past the average is typically 2 to 3%.
- Supply Chain Issues: The delay in parts being available has increased the repair times by 5 days.
- Replacement Vehicle Costs: Rental car costs have increased 30% since 2020.
- Labor shortages: A decline in available skilled auto technicians has been declining and the industry is facing over 100,000 retirements in the coming years.
Rest assured, we’re here to provide assistance. There are opportunities for savings such as: bundling your auto and home insurance, raising your policy deductible, or capitalizing on discounts by implementing preventive measures like installing an automatic water shut-off or temperature monitoring system, to mention a few. Please contact us if you’d like to review your account further.
- Shortage of workers: https://www.builderonline.com/building/trades-subcontractors/hbi-slowdown-in-housing-will-not-solve-construction-worker-shortage_o