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Financial Information for Senior Military Officers

Expenses to Plan for Throughout Life

Expenses to Plan for Throughout Life

This post is written by guest blogger Jackie Waters

While it’s impossible to be mentally prepared for every curve ball life may throw, you can try to be as financially prepared as possible. Setting aside money for the surprises in life is crucial. Some major life events, such as retirement and having a baby, aren’t necessarily surprises, but still require you to save ahead. Planning and saving for both unexpected and expected events in life will help you stay financially sound.

 Retirement

In order to have money for retirement, you have to (surprise) save money. The earlier you start saving, the more you’ll have accumulated when you’re ready to retire. This sounds obvious, but even a few years can make a big difference when you factor in compound interest. And even though it sounds like a no brainer, less than half of Americans have calculated how much money they would even need for retirement, and 30 percent who have access to a contribution plan aren’t even participating.   

There are a variety of ways to save money for retirement. An Individual Retirement Account (IRA) is one of the most popular options. You can save up to $5,500 a year in the account (you can obviously put less), and once you’re over 50, you can contribute even more. Many employers offer a retirement savings plan, such as a 401(k). Take advantage of these plans and contribute all you can. “Your taxes will be lower, your company may kick in more, and automatic deductions make it easy,” says the United States Department of Labor.

 Medical Expenses

While most people know they should save for retirement, many people think about retirement money being spent on groceries, housing, and other living expenses. However, medical expenses are a fact of life, and the older you get, the more likely you’re to need to fork money over to medical bills. This is why saving for future medical expenses is important. 

An HSA account is a way for taxpayers who are enrolled in high deductible health plans to set aside money for future medical bills. Over a year, you can contribute up to $3,100 in pre-tax income to cover any medical expenses under the deductible. Unlike a flexible spending account, HSA funds accumulate and roll over from year to year.

If you, your spouse, or child currently have a chronic condition, then you have even more incentive to set aside money for medical expenses. While you may not be able to save up a ton of money because you’re likely already spending a monthly amount on medical bills, you should still keep track of what you’re spending on prescriptions, medical insurance, and medical payments. 

Depending on how you file, you may get a tax credit for the medical expenses. When keeping track of the expenses, double check that you’re being properly billed. Additionally, since you have a high-flow of mail from bills and attempts at collecting money for those bills, you may be more susceptible to financialfraud, as the culprit may think you’re less likely to notice a new bill. Medical fraud is also a concerning issue.

 Emergencies

Other unforeseenspending can come from simple expenses that you weren’t expecting, such as a car or home repair. While some of these fixes are relatively inexpensive, such as replacing a blown tire, other fixes can getexpensive. For example, if your water heater were to burst, you would need to replace the appliance, as well as any damaged walls or flooring. 

Being unexpectedly diagnosed with a disease, suffering an abrupt injury, suddenly becoming a caregiver, or suddenly losing your job are all life events that would require emergency funds. However, the funds should not be used for planned purchases like buying a new home or car or paying for college. The amount you need to put into the fund will vary depending on your income and lifestyle. Remember that it’s okay to start small and work your way toward saving more.

 

 

 

Putting aside money is a vital part of achieving and maintaining financial success. It’s never too early or too late to start saving. Every bit you can save will be helpful. Regardless of whether the money is for a planned life event like retirement or for an unexpected surprise like a blown tire, you’ll be glad the money was saved away when the time comes to use it.

 

 

 

 

 

 

 

 

 

 

 

Have You Planned How You Will Spend Your Money?
 

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