By Sarah Stewart Legal Group

Retirement can seem so far away, until…well, it isn’t.  When planning for your financial future, there are 6 monsters that can steal your security and peace in your golden years.

(1) Living Paycheck to Paycheck

Are you one of many Americans who finds yourself with no money left after paying your bills at the end of the month? Do you have an emergency fund available?

You may need to budget so you can stash some cash away for your future.  Track your expenses and income for a few months to see where your money goes.  Is there anything you can cut back?

Determine what you need and what you want. Cut back on the entertainment and eating out expenses you have each month and put some money away for emergencies. Strive to have at least 3 months of monthly expenses in savings for an emergency fund.

(2) Reduce Debt

The average American family is drowning in credit card debt, student loans, and mortgages.  Credit card debt is the worst debt you can have.  Interest rates are generally high, and the continual compounding of the interest rates and new debt make it almost impossible to get out of debt when you start.  Cut up your credit cards now and vow not to take on anymore credit card debt.

Pay the minimum monthly payment on each card and work on paying down the lowest balance as soon as possible.  Once that one is paid, apply all the money you were paying to that card to the next highest balance until it’s paid off.  Continue until you are free of credit card debt. Don’t forget to check your credit report annually for fraudulent accounts.

(3) Retirement Planning

Have you planned how much money you will need for retirement?  Have you set retirement goals?  Most employees will fund a 401k through their company, hopefully, the company will make contributions as well.  Find out how much you can put in your account each year and how much your company matches.  Consider using other retirement planning tools as well.

(4) Estate Planning

Many people avoid thinking about estate planning.  They tend to think they’re too young, their estate is too small, or they just don’t understand the process.

Estate planning is more than deciding who gets what when you die.  A good estate plan will also help you plan in case you are unable to make decisions for yourself and decide who will care for your children, and how, if something happens to you. If you already have an estate plan, be sure to review it when major life changes occur so you can be sure it still reflects your wishes.

(5) Planning for Long-Term Care

Long-term care is common for the elderly in today’s world.  With government options like Medicaid constantly on the chopping block, your safest option is to rely on yourself to fund your care. Facilities can cost anywhere from $40,000 – $70,000 per year, depending on the level of care you need and the options and luxury you’re looking for in end of life care. Make sure to budget for the possibility of long-term care in your retirement plan and consider long-term care insurance.

(6) Forgetting to Plan

Be sure to create a financial plan that includes all the aspects of planning we covered here.  A sound financial plan with estate and insurance planning can help you avoid any pitfalls.