More than half of Baby Boomers (61%) say running out of money in retirement is scarier than even dying! The first step to tackling your money fears is to identify them. I have 5 common financial fears people are facing:
- Losing Your Income
Losing a job is a top money concern, with the national unemployment rate close to 6%. You’ve heard the expression “The best offense is a good defense”, and that is truly the case here. I recommend my clients have an emergency fund with 3-6 months’ living expenses for situations just like this. I know it can be hard to save money when you’re faced with day-to-day expenses. Set up an automatic withdrawal to take out $50 or $100 per month and put it into a dedicated account. Taking the money out before you even see it will help strengthen your resolve not to spend it.
- Asking for a Raise
Asking for a raise- even if it’s well-deserved- can be difficult. But keep this in mind: only about 41% of American workers ever ask for a raise, even though 84% of bosses expect them to ask for one (according to salary.com.) Before you march into the boss’s office, make sure you do your homework. Research the salaries of comparable jobs; figure out how much money you want to ask for; then make a list of reasons you deserve a raise.
- Talking Dollars & Cents
For many people, talking about money is taboo. But I want to stress how important it is to do so. If you are married, I suggest setting up monthly meetings to discuss your budget, your goals and the financial responsibilities each of you will take on. Many of my older clients who are in and near retirement are hesitant to talk about money with their adult children. Start the conversation by telling your kids you want to make sure they have all of the information they need for when you can no longer take care of your finances.
- Credit Card Phobia
Young people especially are shunning credit cards. More than 6 in 10 (63%) Millenials don’t have a single credit card in their wallet. I understand why people have concerns about credit cards- it can be easy to overspend and rack up debt. But credit cards play an important role in establishing a credit history, which you will need to qualify for insurance policies, auto and mortgage loans and sometimes even a job. The key is to pay off the card each month. Otherwise, you could get hit with interest rates as high as 23%. That kind of debt can snowball quickly.
- Running Out of Money
With people living longer, and the shift from company pensions to 401(k)s that workers manage themselves, running out of money is a real concern for many retirees. You need to formulate a plan- one that starts with saving as much as possible when you are young. I recommend dedicating 10% of your salary in your 401(k) or IRA. Then once you hit retirement age, know how much you can withdraw each month and stick to it! A trusted financial professional can be an invaluable resource in creating a plan and overcoming this money fear.