New year, new start: Getting financially fit for the future

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As the calendar flips to a new year, it brings with it the promise of fresh beginnings. Whether it’s committing to a healthier lifestyle or addressing financial goals, the start of the year is an ideal time to take care of ourselves ― planning for both sickness and health.

Getting started can be difficult, but a few small actions can get you on the road to a more secure and enjoyable financial future, whatever your health status.

The Challenge

It’s no secret that some tasks are easier to put off. Whether it’s committing to a healthier diet or taking control of our finances, the things we procrastinate on often carry a weight that grows over time. This can feel overwhelming. It often feels like there are so many things we “should” be doing. It’s easier to focus on small pieces that lead to bigger goals.

So, what can you do?

Ultimately, you want to take care of yourself physically and financially. So, start by breaking down your insurance needs into different areas of coverage.

Health insurance is critical. Not surprisingly it is one of the most important benefits employees want from their employers. According to LIMRA’s 2023 BEAT Study: Benefits and Employee Attitude Tracker, employees rate paid time off, vacation or sick time; medical insurance; and a retirement savings plan as the most important benefits employers can offer. LIMRA is a well-known life insurance research group.

Workplace benefits can help people manage the costs associated with medical expenses. They can also provide coverage for a range of healthcare services, treatments, and medications. But to be really prepared, you should consider other benefits like disability insurance and long-term care insurance.

Disability insurance replaces a portion of your income if you are unable to work due to illness or injury. This ensures that you can continue to cover essential living expenses, such as mortgage or rent, utilities, and groceries, even when you are not earning a regular income. LIMRA’s Insurance Barometer Study shows that just under half (48%) of consumers perceive disability insurance as important.

Long-term care insurance is designed to cover the costs associated with extended care needs, such as nursing home care, assisted living, or in-home care. Without insurance, these services can quickly deplete savings and assets. Long-term care needs can place a significant emotional and financial burden on family members. This insurance can help cover the costs, reducing the strain on family members who might otherwise need to contribute financially or provide care themselves. By securing coverage when you are healthy, you may have more options and lower premiums. Waiting until a health issue arises may limit your choices and increase the cost of coverage. The Barometer Study shows 61% of consumers see a need for long-term care insurance.

Life insurance is another crucial component of a comprehensive financial plan, providing financial security for your loved ones in the event of your passing. If you haven’t already, the new year is an opportune time to purchase life insurance. Review your current policy if you already have one, ensuring that coverage aligns with your current circumstances. Life changes such as marriage, the birth of a child, or significant income adjustments may necessitate adjustments to your life insurance coverage.

These products are important components of a comprehensive risk management strategy. They provide financial protection and peace of mind, ensuring that you and your loved ones are safeguarded against potentially devastating financial consequences. As with any insurance decision, it’s essential to carefully review policy terms, understand coverage limits, and consider your specific needs and circumstances.

You also want to protect your financial health in the case of excellent health and longevity.

This means saving for a long and enjoyable retirement. Saving for retirement is a significant undertaking, but the benefits are important. If your employer offers a workplace retirement plan, such as a 401(k), take advantage of it. Contribute consistently and, if possible, maximize your contributions to capitalize on employer matches. If a workplace plan is not available, consider opening an Individual Retirement Account (IRA) to start building a retirement nest egg. Automate contributions to make saving a seamless part of your financial routine.

One of the most frequently delayed tasks is retirement planning. However, the truth is that the earlier you start, the more secure your retirement will be. It’s never too early (or late) to start. Consider consulting with a financial advisor to create a personalized retirement plan that aligns with your goals and financial situation.

Overcoming the Challenge

Addressing these financial tasks may seem daunting, but breaking them down into manageable steps can make the process more approachable. Consider setting specific, measurable, and realistic goals for each task. For instance, commit to saving a specific percentage of your income towards retirement or allocating a set amount to your life insurance premium each month.

The new year is not just about resolutions; it’s about embracing positive changes that will shape your future. By implementing financial strategies for retirement, life insurance, disability and long-term care, you are actively shaping a more secure tomorrow.

Alison Salka

 

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Alison Salka, Ph.D., is senior vice president, member benefits, at LIMRA, a leading life insurance industry research group.