For a good portion of Americans, life insurance is a critical component of financial planning. However, when a life insurance policy becomes too expensive to maintain due to premium increases, the owner can be faced with some difficult decisions.
Every year, millions of American workers enroll in employee benefits through their workplaces during a period known as annual enrollment. It’s usually a short window of time, but employees make crucial financial decisions for their families for the coming year. In addition to medical insurance, consider these voluntary benefits that can help bridge the gap between what health insurance covers and what you’re financially responsible for.
Help Safeguard Your Family’s Finances
(Family Features) Every year, millions of American workers enroll in employee benefits through their workplaces during a period known as annual enrollment. It's usually a short window of time, but employees make crucial financial decisions for their families for the coming year.
In addition to medical insurance, many employers offer a range of voluntary benefits - those you select and pay for yourself, often by having the cost deducted directly from your paycheck. These voluntary benefits can help bridge the gap between what health insurance covers and what you're financially responsible for, especially as more employees opt for high-deductible health insurance plans.
In fact, according to a poll of 1,512 full-time U.S. workers conducted by employee benefits company Unum, 49% of working adults plan on enrolling in a high-deductible health plan for the coming benefit year, with Millennials (58%) and Gen Z'ers (54%) at even higher rates.
"While high-deductible health plans offer lower monthly payments, that can mean more financial responsibility for policyholders when they need to use the benefit," said personal finance expert Laura Adams. "Combining a high-deductible health plan with a health savings account can offset out-of-pocket costs, but it's also a good idea to consider voluntary benefits like disability, accident and hospital insurance to further financially protect your family."
If an accident, illness or injury prevents you from working, disability insurance replaces a portion of your income. While it may seem unlikely to many they would ever experience a disability, it's more common than some realize. Based on 2019 information from the Social Security Administration, more than 1 in 4 of today's 20-year-olds will become disabled before reaching age 67.
Accident and hospital insurance can pay a lump sum directly to you to offset out-of-pocket costs associated with medical care often not covered by health insurance.
Voluntary benefits, policies and details vary, so it's essential to review your options and discuss with your family before your benefits enrollment begins.
"Investing a little additional time on the front end can help reduce your family's financial risk down the road," Adams said.
For more information about employee benefits, visit Unum.com/benefits.
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(BPT) - If you had to grade your financial literacy, what would it be? Are you an A+ saver, investor and planner, or do you think you could do better? If you grade yourself average at best, you’re not alone.
When asked to grade their own financial literacy, more than half of Americans say they’d earn a “C” or lower, according to new data from Prudential Financial. This isn’t surprising, considering data from Prudential’s Financial Wellness Census shows less than half of Americans are on track to meet their financial goals, including planning for retirement.
“Regardless of where you are on your family’s financial wellness journey, the best way forward is through financial literacy,” says Prudential Advisors President Brad Hearn. “Researching, educating yourself and getting advice from a financial professional can help you make the best decisions based on your life stage, risk tolerance and goals.”
Hearn says each family’s situation and goals are unique, and things like life stage and personal preference will impact how they choose to prepare for their financial future. To get started, here are five financial wellness basics every family should master:
Set up an emergency fund
Life is a series of experiences, and sometimes the unexpected can hit your finances hard. Whether it’s a car breaking down, your AC unit on the fritz or even losing a job, it’s important to be prepared for emergencies. If you don’t already have an emergency fund, start saving a little each month until you reach your goal. A good rule of thumb is to have three months’ worth of expenses saved in an emergency fund. So, if your monthly expenses are $2,500, you should have $7,500 saved.
Create a budget
Saving for college? A new car? How about starting that emergency fund? Whatever your family’s financial goals are, it’s important to have a plan in place that helps you achieve those goals. Budget to manage day-to-day expenses, and include in that budget a commitment to save for bigger milestones. For tips on getting started, do some research. There’s no shortage of advice, whether you decide to go it alone or consider using the help of a professional financial advisor.
Plan for the unimaginable
If you have people who count on you for financial support or caregiving, you should have life insurance. A life insurance policy can help give your family financial peace of mind should the worst happen. There is no rule as to how much life insurance you need, but important things to consider are your annual income, mortgage debt, potential college costs for kids and other future financial obligations.
Save for retirement
According to Prudential data, of Americans who have retirement savings and debt, nearly one-quarter have more in total debt than in retirement savings (23%), while 15% of Americans say that they have no debt, but also have nothing saved for retirement. Planning for retirement is something that should start as soon as possible. If your work offers any type of matching program, make sure to take advantage. If you don’t, you’re essentially leaving free money on the table.
Seek professional advice
Retirement, life insurance and savings can be confusing. Information overload is partly to blame. According to Prudential data, two-thirds of Americans agree that the list of things they need to learn to successfully manage their finances keeps growing, not shrinking. That’s where financial literacy programs and professional financial advice can play a key role. Nearly two-thirds of Americans don’t have a financial advisor. They say they cannot afford one (42%) or don’t believe their financial situation warrants needing an advisor’s help (26%). The reality is that advice is more within reach than ever before — and it’s not just for the wealthy. A financial professional can help at various stages in life and work with you to create a strategy based on your timeline, risk tolerance and goals.
“Financial wellness isn’t always a matter of having more money,” says Hearn. “Instead, it’s a journey that takes a combination of proactive effort, dedication and professional guidance.”
Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries. Life insurance is issued by The Prudential Insurance Company of America, Newark, NJ and its affiliates.
Regardless of income or wealth, the road to financial health – how you are able to manage your day-to-day financial life while building for the future – can be a lifelong journey. What you do today can build toward or detract from your long-term resilience and ability to pursue opportunities. These questions can serve as a starting point to take inventory of your financial health.
Planning for the Future
Taking inventory of your financial health
(Family Features) Only 28% of Americans are financially healthy, according to the U.S. Financial Health Pulse. Most others will have difficulty reaching long-term financial goals and are more vulnerable to the threat of financial shocks, such as car trouble, unforeseen medical bills or job loss.
Regardless of income or wealth, the road to financial health – how you are able to manage your day-to-day financial life while building for the future – can be a lifelong journey. What you do today can build toward or detract from your long-term resilience and ability to pursue opportunities. Whether you want to take that dream vacation, prepare for retirement or save for college, financial health takes effort to build.
“An overwhelming majority of the country is experiencing financial challenges that have lasting effects on people’s lives, on their ability to weather the inevitable ups and downs and on their chances to pursue their dreams,” said Jennifer Tescher, CEO of the Center for Financial Services Innovation (CFSI), the nation’s authority on consumer financial health. “Each year, CFSI and MetLife Foundation join forces on #FinHealthMatters Day to highlight the importance of financial health, especially for the 180 million people who are financially vulnerable.”
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Center for Financial Services Innovation
(Family Features) Whether you’re considering ways to give to deserving causes or looking for the perfect gift for a loved one for a special occasion, remember that not every gift is a tangible item. In fact, some of the best gifts are those you can’t touch at all, but those that make the world a better place.
Socially motivated gifts, of your own accord or on behalf of someone else, are much more than a one-time present. They have the potential to make a significant impact on lives or to further the work of a cause-based organization.
Consider these giving options to make a lasting impact:
Retirement plans: Because retirement plans are taxed differently than most assets, they may actually become a tax liability. Naming a nonprofit organization as a beneficiary of your retirement account can be an attractive option for leaving a legacy and reducing income, and possibly estate taxes, for loved ones. A tax-exempt organization may be eligible to receive the full amount, bypassing income taxes. This means, for example, that a $100,000 IRA can be worth the full $100,000.
Life insurance plans: A gift of life insurance is an affordable way to make a significant gift while also enjoying tax savings during your lifetime. Benefits include the ability to give a significant gift at a fraction of the value; tax savings that can be immediately realized; a reduction in the final taxes of your estate and the ability to pass gifts outside of your estate.
Gifts of real estate: You may decide that the greatest gift you can make is to leave your home or other property to a charitable organization. This kind of gift is ideal for someone who intends to continue living in his or her home or property through their lifetime, but still make a charitable gift. You can leave this generous gift by signing an agreement with an organization about maintaining the property so you can use it throughout your lifetime. You may even receive a tax deduction for your gift.
Gifts of stock: Stocks, bonds and mutual funds that have appreciated in value are among the best ways to gift a nonprofit organization. You may receive a charitable income tax deduction for the full market value of the stock (up to a maximum of 30 percent of your adjusted gross income) and avoid paying the capital gains tax on any increase in the value of the stock.
Gifts of cash: This type of gift is simple and eligible for an immediate charitable tax credit. Although many organizations allow you to specify how you would like the funds to be used, an unrestricted monetary donation allows the organization to allocate your contribution into the project or area that needs funds most.
If you designate a gift on someone’s behalf, be sure to share a card or a note with the honoree letting them know about the contribution. Particularly if it’s a cause close to the heart, it’s sure to be just as gratefully received, if not more so, as any trinket you might buy.
Find more ideas for gifts that make a lasting difference at eLivingToday.com.
When looking for opportunities to make an impact on the lives of others, selecting a cause to support can be an overwhelming task with so many options to choose from. However, considering opportunities that can change the lives of kids is one way to make a lasting impact for generations to come.
Helping children early on can change the trajectory of their lives, set them up for success and empower them to achieve their dreams. This is especially important for kids living in poverty who are not guaranteed access to things like medical care and quality educations. According to global humanitarian organization Children International, nearly half the world lives on less than $2.50 a day and 1 in 5 kids in the United States lives in poverty.
Consider these ideas to make an impact on children in need now and well into the future:
Become a mentor or coach. A positive role model can make a life-changing difference for a child from disadvantaged circumstances. As a mentor or a coach, you can help children explore and nurture their unique talents and guide them toward a successful future.
Volunteer at a local school. Families increasingly rely on two incomes to support their households, which means parents are less available to lend their time to their children’s classrooms or schools. At the same time, public school funding is shrinking. As a volunteer, you can help fill these gaps and contribute to bettering the learning opportunities for children in your community.
Sponsor a child. You may be surprised to learn how far a monetary donation can go. For example, Children International supporters can join a monthly giving program and sponsor a child in poverty for $32 per month. Your donation establishes a connection with an individual child who receives access to life-changing benefits like medical care, educational support and life-skills training. The institution is a CharityWatch top-rated organization that serves 250,000 children in 10 countries. If a reoccurring donation is not right for you, the organization also accepts one-time donations. Learn more at children.org.
Donate new or used items. Service organizations such as shelters generally operate on tight budgets and rely on contributions from the community. Gently used items in good condition such as children’s clothing of all sizes and warm bedding are generally welcome.
Photo courtesy of Getty Images (Young boy and Grandmother)SOURCE:
(Family Features) For many young adults, heavy debt and lower-paying jobs lead to a delay in traditional life goals like buying homes and starting families. However, research suggests that millennials' financial worries are adding up to more than stress and disappointment, particularly once they become parents.
Two in five young parents rate their financial health as unsatisfactory and 40 percent said financial stress is putting a strain on their relationship, according to a survey from the National Endowment for Financial Education and Parents Magazine. More than half of millennial parents concede they would surrender a year of their life to have more financial security.
"Being a parent takes patience, forgiveness and a lot of silent counts to 10, but it also takes a lot of money," said Paul Golden, director of Smart About Money, a nonprofit foundation inspiring educated financial decision-making for individuals and families through every stage of life. "Many young adults start off with significant student loan debt. When you add housing, groceries, utilities, transportation expenses and health care costs, the strain increases, and oftentimes the math in the household budget doesn't add up."
The price tag of raising a child is more than $304,000 based on the projected inflation-adjusted cost of rearing a child until age 18, not counting college. Managing that financial pressure begins with planning for the future and truly understanding the costs associated with adding a baby to the family or buying a new home, Golden added.
"Regularly paying attention to your money and practicing major life transitions before they happen is an important step toward achieving financial health," he said.
As a parent, you have many financial responsibilities to balance, but planning for the future can help prevent unforeseen expenses from tipping your scales.
Debt reduction. Make a plan to pay off excessive debt, particularly credit cards. Tackle your lowest balance first to gain momentum then take on the next smallest. Additionally, pay attention to higher interest rates that are costing you a lot of money.
Use a budget. Get a budget and spending plan in place to keep track of your expenses. Try an envelope system with monthly allowances for groceries, entertainment, utilities, etc.
Start saving. Build an emergency fund. Aim for a small, achievable goal as low as $500 then set the bar higher. Participate in your employer-sponsored savings program to boost retirement savings, especially if there is a match. Make it an automatic payroll deduction and increase it when your paycheck goes up. As far as your child's college savings, save what you can, when you can. Every little bit will help when education bills come due.
Child care. Consider establishing a flexible spending account if one is offered by your employer. Parents can use pretax dollars to pay up to $5,000 in child care expenses in most states.
Review insurance and important paperwork. Create a will either by using an online program or hiring a professional to name your child's guardian, and designate at what age any payouts, savings or investments will be distributed. With health insurance, notify your employer within 30 days of the birth to ensure that the child is eligible for any dependent benefits. Purchase appropriate health care coverage to protect your family. Review your employer's life insurance plan and determine if it is adequate for your needs. If not, consider purchasing additional life insurance.
Save for the future. Put money for short-term expenses (1-5 years) in safe investments, such as savings accounts and certificates of deposit. These low-interest-rate investments will not grow dramatically, but they will not lose money, either. Money you will need beyond five years should have the opportunity to grow at a risk level you are comfortable with. Use a combination of steady-earning savings accounts and more volatile stock and bond mutual funds to help protect you against long-term losses.
Get started with these tips and learn more through self-directed courses at SmartAboutMoney.org.
Spread the costs.
Compile a list and calculate the total of anticipated expenses, including doctor fees, maternity clothes, birthing classes, unpaid time off for maternity leave and necessities for the baby. Distribute the total cost throughout the duration of your pregnancy. If you pay as you go rather than purchase everything at once, the sum becomes easier to manage.
Know what's covered.
Health care plans vary widely and while a friend may have had all the expenses paid for, not all insurance plans are alike. Know what you will be responsible for and when payments are due. Ask about co-pays, co-insurance, deductibles, out-of-pocket costs, birthing and other classes, and specialty tests. Discuss how costs change if you require a C-section or any other additional hospitalization.
Account for time off work.
Look into maternity and paternity leave, and learn about additional unpaid time off under the Family and Medical Leave Act. Be aware that if your company has fewer than 50 employees, it's not required to offer FMLA leave. Ask your employer if you can use unused sick and vacation days to cover your maternity leave. Don't forget to calculate any lost pay if you'll need unpaid time off for doctor's appointments.
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