Declare your financial freedom

Long version

Independence Day is almost here. And as we make progress in moving past the COVID-19 pandemic, more of us will be able to enjoy Fourth of July activities. However you observe the holiday, it’s important to recognize all the liberties we enjoy in this country. But you may still need to work at one particular type of freedom – and that’s financial freedom. How can you achieve it?

There’s no one instant solution. But you can work toward financial independence by addressing these areas:

  • Retirement savings – Approximately 45% of Americans think the ideal retirement involves “enjoying my well-earned freedom," according to the March 2021 Edward Jones/Age Wave Four Pillars of the New Retirement study. But when you’re retired, the risk to this freedom is obvious – the paychecks have stopped but the bills haven’t. Furthermore, you could spend two or three decades in retirement. That’s why it’s so important to contribute as much as you can afford to your tax-advantaged retirement accounts, such as your IRA and your 401(k) or another employer-sponsored plan. At a minimum, put in enough to earn your employer’s matching contribution, if one is offered. Whenever your salary goes up, try to increase the annual amount you put in your 401(k) or similar plan. And if appropriate, make sure you have a reasonable percentage of growth-oriented investments within your 401(k) and IRA. Most people don’t “max out” on their IRA and 401(k) each year, but, if you can consistently afford to do so, and you still have money you could invest, you may want to explore other retirement savings vehicles.
  • Illness or injury – If you were to become seriously ill or sustain a significant injury and you couldn’t work for an extended period, the loss of income could jeopardize your ability to achieve financial independence. Your employer may offer disability insurance as an employee benefit, but this coverage is typically quite limited, both in duration and in the amount of income being replaced. Consequently, you may want to consider purchasing private disability insurance. Keep in mind that this coverage, also, will have an end date and it probably won’t replace all the income lost while you’re out of work, but it will likely be more expansive and generous than the plan provided by your employer.
  • Long-term care – Individuals turning 65 have about a 70% chance of eventually needing some type of long-term care, such as a nursing home stay or the assistance of a home health aide, according to the U.S. Department of Health and Human Services. And these services are quite expensive – the average annual cost for a private room in a nursing home is more than $100,000, according to Genworth, an insurance company. Medicare typically covers only a small part of these expenses, so, to avoid depleting your savings and investments (and possibly subjecting your grown children to a financial burden), you may want to consider long-term care insurance or life insurance with a long-term care component. A financial advisor can help you choose a plan that’s appropriate for your needs.

By addressing these areas, you can go a long way toward attaining your financial independence. It will be a long-term pursuit, but the end goal is worth it.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC

Number of words: 533

Short /radio version

PSA: Declare your financial freedom

TBA: June 28, 2021

Words:184 (excluding FA’s name, address/phone number and disclaimer)

Independence Day is almost here. It’s important to recognize all the liberties we enjoy in this country, but you may still need to work at one particular type of freedom – and that’s financial freedom. How can you achieve it?

First, contribute as much as you can afford to your retirement accounts, such as your 401(k) or another employer-sponsored plan. And when your salary goes up, increase the amount you put into your 401(k) each year. Beyond your 401(k), you may also be able to contribute to an IRA, which also offers tax benefits, plus a wide array of investment choices.

Building your IRA and 401(k) is one thing – but protecting them is another. You may face situations in which you need a sizable amount of cash in a hurry, perhaps for a major car repair. Dipping into your retirement accounts early could result in penalties, but you can help avoid this setback by building an emergency fund.

Another way to help preserve your financial independence is to protect your income, which could be jeopardized if you become ill or injured. Your employer may offer disability insurance, but if it’s not enough, you may want to consider private coverage.

Here’s one more suggestion: Guard yourself against the high costs of long-term care, such as an extended nursing home stay. A financial professional can suggest an appropriate strategy.

By addressing these areas, you can go a long way toward attaining your financial independence.

This content was provided by Edward Jones for use by (FA's NAME), your Edward Jones financial advisor at (Branch address or phone #).

Member SIPC

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Number of words: 184