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Preparing for the Future: What to Set Up for Stability

  • December 13, 2022

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Stability is essential in life, especially for those approaching or who have reached retirement age. In addition to the financial security it provides, it also helps older adults to feel secure and comfortable in their day-to-day lives. Research has shown that seniors with no significant life disruption events report higher levels of overall health and well-being than those who experience significant changes such as a job loss or the death of a spouse.

Security in retirement is not limited to finances; social connections are equally important for maintaining good mental health later in life. Studies have found that having strong ties with family members, friends, and peers helps create feelings of belongingness among aging adults, which can help reduce loneliness and depression symptoms. Additionally, participation in recreational activities such as gardening or playing chess can help combat cognitive decline associated with aging by enhancing problem-solving skills and memory formation abilities.

However, you might not know where to start when it comes to setting up stability for the future. Here are a few steps you can take today to set yourself up for a stable retirement.

Emergency Funds

No matter what stage you are in life, you must always have some type of savings for emergencies. This is especially true for those nearing retirement age, as the financial cushion can cover unexpected bills or medical costs that arise suddenly. Ideally, saving at least six months' worth of your monthly expenses in an emergency fund would be best.

Most people dedicate stability to having more than one emergency fund, including investments, savings accounts, and other financial vehicles. Diversifying where your funds are held will make you less likely to lose everything should a single source fail.

You can start with small contributions to build an emergency fund. Start by opening a savings account and setting up automatic transfers from your paycheck or checking account. This way, you can save without having to overthink it.

Health Insurance

 

Your health is one of your most valuable assets, so you'll need to ensure that you are covered in any medical emergencies. This means having appropriate health insurance in place.

Medicare provides coverage for hospital care, doctor visits, and prescription drugs for those old enough. It's essential to research supplemental plans to ensure all needs are met should an unexpected illness or injury arise.

Long-term care insurance can also help cover costs for nursing homes or assisted living facilities. If a family member has already purchased this policy, it would be wise to review it annually to ensure everything is up-to-date and covers what is required if necessary.

Life insurance might also be an essential policy to get if you have a family. This provides financial stability for the remaining family members if anything happens to you. These policies differ, so please review the coverage carefully and decide what works best.

Retirement Accounts

Having a plan in place for retirement is a must-have when it comes to creating stability. Whether you want to set aside money for yourself or depend on social security, having some retirement savings account will help secure your future income.

You can open up 401(k)s, IRAs, and other tax-advantaged accounts that allow you to save pre-tax dollars and defer paying taxes until later in life. You can even invest in low-fee index funds to increase potential growth with minimal risk over time. Additionally, contributing to a Roth IRA can be beneficial, as the funds deposited are taxed upfront, but withdrawals are tax-free.

Unfortunately, some companies do not offer retirement savings plans, making it harder to get a head start. If this is the case, you can open up a plan for retirement investment to begin saving for the future.

Will and Testament

Creating a will and testament is an often overlooked aspect when setting up stability for the future. Everyone should have one regardless of age, marital status, or wealth.

Your will outlines who will receive your assets after you pass away and how they're distributed. It also stipulates who makes decisions on behalf of your estate if you become incapacitated, which can be crucial during distress and confusion. Additionally, creating a living trust could help minimize taxes on inheritance and ensure that assets are transferred quickly and efficiently.

These documents ensure that all matters related to your finances are correctly handled if anything happens.

Final Thoughts

Stability is an essential part of life and can be achieved with proper planning. By setting up these accounts and documents now, you are protecting yourself and your family in the future. All it takes is some simple steps to ensure stability for the years ahead.

It's never too late to start preparing for tomorrow, so make sure to get started as soon as possible. Once you have a plan in place, review it annually and make adjustments if necessary. With some foresight and dedication, you can give yourself a greater chance at long-term financial stability.

 

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