Facing Financial Fears
Perhaps you fear your identity will be stolen or you’ll lose your job. Or it’s facing the looming questions: Have I saved enough? How do I create a budget and make it work? Here are several common fears and how to face them this Halloween:
I fear I may never get out of debt.
How to face your fear: The scariest part is identifying exactly how much debt you have and why. Once you’ve assessed your debt, devise a plan to pay off the smallest debt first. If you need some help contact our financial advisor. We’ll help you come up with a plan to get you back on track.
I fear bills and bank statements.
How to face your fear: Bills and bank statements are unavoidable, but don’t live in denial if you’ve gotten to the point of fearing bills and bank statements you’re probably overspending. Cut back don’t spend more than you make. Then build a budget and stick to it. We have tools and calculators to help you.
I fear my identity will be stolen.
How to face your fear: Be diligent. Monitor your credit reports, bank statements and transactions Sign up to receive text or email alerts from your bank or credit union if your financial institution offers this service.
I fear I haven’t saved enough for my future.
How to face your fear: It’s never too late to start! Contribute more. Pay yourself first and stick to your budget.
I fear I will lose my job someday.
How to face your fear: Prepare in advance. Establish an emergency fund and stash away at least six months of living expenses.
Remember, facing your financial fears doesn’t have to be scary. The key is to identify the cause of your fears and face them by taking action, making a plan, and being realistic about your situation.
Coffee or Savings
Take a look and see what saving $20 per month could do for your savings goals with our infographic demonstrating the power of compound interest!
If you would like to download a PDF of the infographic, click on the image.
This infographic and these calculations are for informational purposes only and is not intended to constitute legal, financial, or tax advice. Certain recommendations or guidelines may not be appropriate for everyone. Consult your personal advisor or attorney for advice specific to your unique circumstances before taking action. Your actual situation may be different from the value shown here. This example uses a projected interest rate of 6% for illustrative purposes only. No guarantees are expressed or implied. Results will vary depending upon the actual rate used in the calculation. Over time, the results of any investment will fluctuate, can lose value, and are not guaranteed.
The 403(b) retirement program is offered by the WEA TSA Trust. TSA program registered representatives are licensed through WEA Investment Services, Inc., member FINRA. All advisory services are offered through WEA Financial Advisors, Inc., a registered investment advisor.
Emergency Road Service Reimbursement
For just $1 per month per vehicle, you can get up to $100 of coverage per incident to reimburse you for towing or for labor to bring gas, change a tire, or open your vehicle. A $2 per month per vehicle for up to $250 of coverage per incident is also available.
Give us a call to add Emergency Road Service Reimbursement to your existing policy at 1-800-279-4030.*
*Vehicle must carry liability and comprehensive coverages to add Emergency Road Service Reimbursement. The costs of parts or materials such as gas or tires are not included in the coverage.
Take the risk out of Halloween with proper insurance coverage
As a homeowner, renter, and/or motorist, consider the important role your insurance plays in protecting you and your finances in the event the unexpected happens.
Tricks can be costly when they cause damage to your home or car. Standard home and renters policies generally provide coverage for vandalism, less your deductible. If your car gets damaged, there may be coverage under the optional comprehensive part of your auto policy (if you carry it).
Decorations can be more than scary! Fire damage from a Halloween candle or electrical decoration is generally covered by your home or renters policy. The amount and terms of coverage are stated in your policy.
Is your coverage limit enough to replace your home and personal belongings in the event of a total loss? Too often people under insure their largest investment for the sake of a few dollars each month and put their family’s financial security at risk.
Use extra caution while driving. Remember that kids out canvassing the neighborhood for treats on Halloween night may be distracted by all the costumes and candy. Dimly lit streets make it difficult to see children, so proceed with caution. Accidents that do not involve another driver or pedestrian are typically covered under the optional collision portion of an auto insurance policy, if you carry it. If another car or person is involved in the accident, the liability portion of your auto policy would kick in (up to your coverage limits).
If you have questions about your insurance coverage, call us at 1-800-279-4030.
Keep track of your beneficiaries
While saving as much as you can for retirement is important, it’s just as important to determine the beneficiaries of your account—and keep them up to date.
Naming beneficiaries for your retirement accounts is an important first step in your estate planning. Without careful consideration, your decision may have unexpected tax and estate planning implications.
There are two basic types of beneficiaries. Primary beneficiaries are entitled to receive any undistributed assets in your account following your death. They share equally in your account unless you specify different percentages. If a beneficiary predeceases you, his or her share of your account is divided proportionately among the surviving beneficiaries.
Contingent beneficiaries are entitled to receive any undistributed assets in your account only if you have no surviving primary beneficiaries at the time of your death. If there are no surviving primary beneficiaries, your contingent beneficiaries share equally in your account unless you specify different percentages.
You may name anyone as a beneficiary of your account. Although spousal beneficiaries have the most flexibility with an inherited retirement account, for many reasons you might find it more appropriate to name someone other than your spouse as your primary or contingent beneficiary. You may also name a trust or charity, as well as other options. However, these options may have different financial consequences. Consult an attorney or tax advisor if you have questions about your beneficiary designations.
Types of accounts
The types of accounts that may require beneficiaries include:
- Retirement accounts such as a 403(b) and IRA.
- Wisconsin Retirement System (WRS) accounts.
- Other types of investment accounts, such as Member Benefits’ Personal Investment Account. Life insurance policies and health savings accounts.
- Some banks will allow you the option of naming a beneficiary on your checking account so that it passes directly to that person.
It’s important to keep your account with Member Benefits up to date as well as any other accounts you may have. When members don’t update their beneficiaries after a major life event and then pass away, those named beneficiaries can no longer be changed. If members have no beneficiaries named on their account, the account will go to their estate. Unfortunately, that can cause many issues and delays in accessing those funds if they are needed.
Be sure to name and update your account beneficiaries on all of your accounts—and make sure they match up with your estate plan as well.
Subscribe to a simple savings plan
If you’re looking for an easy solution to boost your retirement savings this year, we have one word for you: Automatic. Making contributions directly from your checking or savings account or taking advantage of payroll deduction are the easiest ways to build your IRA retirement savings with Member Benefits.
Chances are you’re already paying for other things automatically through a subscription. Do you watch shows on Netflix, Hulu, or a similar platform? Look forward to monthly boxes of prepackaged meals, beauty products, or the like? If so, you’re probably enjoying its benefits without really missing the money that’s being taken from your account every month to pay for it.
Automating your retirement savings contributions is like signing up for a subscription service to benefit the future you. It’s easy to do with Member Benefits. Just set it, forget it, and watch your retirement savings grow over time.
You have two options to choose from. Both make for smaller, easier-to-manage installments—and they are free with no additional fees.
- SmartPlan: Our popular automatic monthly payment option is a convenient and budget friendly way to make IRA contributions. Contributions are automatically drawn from either your checking or savings account.
- Payroll deduction: Payroll deduction is a convenient option in many Wisconsin public school districts. If available at your district, you can payroll deduct your IRA contributions. Just contact your business office.
Subscribe to a new savings plan—you’ll thank yourself later. Call us at 1-800-279-4030 to learn more, or visit weabenefits.com/enroll to start saving with an IRA today.
Have you planned for this financial risk?
The duration of paid care varies widely. However, according to LongTermCare.gov, about 69% of those who turned 65 in 2017 will need an average of three years of some kind of LTC during their lifetime. And that can be costly. For example, in Wisconsin, the median cost for a semiprivate room in a nursing home for just one month is $8,334 (Genworth Cost of Care Survey 2018).
Unfortunately, most people haven’t planned for this financial risk—only about 7.2 million Americans have LTC insurance (AARP). For many, this means losing their wealth in a short period of time, even for a relatively brief nursing home stay.
Because neither health insurance nor Medicare was designed to pay for LTC services, individuals who require these services as a result of an accident or illness may need to dip into their personal savings or use other assets to cover the costs…unless they have LTC insurance.
LTC insurance can be more affordable than you think. If you meet requirements, plans may include rate caps, limited-time pay options, or the ability to insure two people for a discounted premium.
Contact us at 1-800-279-4030 for more information on our long-term care insurance program.
Freshen up your financial knowledge
Build a budget
A budget sets the groundwork for sprucing up your finances. Think of it as a road map for managing your money or a tool that helps you make smarter decisions as you track your monthly expenses.
Not only does it help ensure you’ll have money for the things you need and that are important to you, but having a spending plan can also help keep you out of debt (or work your way out of it).
In simple terms, a budget compares what’s coming in with what’s going out. And it’s not just for those who need to closely monitor their money—even people with large paychecks and lots of money in the bank can benefit too.
Why have a budget?
- It helps maximize your savings and investments, allowing you to make sure your hard-earned money is being used to its best purpose.
- You’ll be better prepared in case of an emergency such as a job loss, major health crisis, or extensive home repair.
- You can build in a plan to pay off debt.
- It gives you some room to splurge. That may sound counterintuitive, but having a budget can “give you permission” to buy those concert tickets or celebrate at that nice restaurant by tracking your expenses and building in an amount you choose for the fun spending.
- It can help you clarify your short- and long-term savings goals. Long-term financial goals are often too easy to put off for later. For example, depending on your age, saving for retirement may seem a long way off. However, a budget can help you discover a way to fit it in, even if it’s just a small amount at first. Starting earlier than later gives you a huge advantage by utilizing the power of compound earnings (see next page).
- You’ll be less likely to spend money you don’t have. Before credit cards, people knew easily whether or not they were living within their means. But in 2017, the average American had a credit card balance of $6,375, up 3% from the year before (Experian). Those who don’t pay attention and overuse their credit cards may not realize they’re overspending until they’re weighed down with debt.
Budgets are not just about saving and spending. One important aspect of your financial health is protecting yourself from loss with appropriate insurance coverage. We can help you assess what you need.
You don’t need to be a math whiz to create and maintain a budget. Spreadsheets and online software can take care of the calculations for you. Do a search for software online, create your own spreadsheet, or go old school with a ledger—whatever works for you.
Stick with it
The point of a budget is to give you more financial freedom, not less. If you find yourself having a hard time following a budget, follow these tips:
- Keep your future top of mind and remember how your budget will help you get where you want to be.
- Make it more difficult to impulse buy. Take yourself off of retailer e-mail lists and remove your stored payment information online so you can’t just click to order.
- Find a like-minded friend or online budgeting forum to help keep you accountable.
- Use cash more often—swiping a card is less “real.”
- Reward yourself once in a while with something you enjoy.
- Educate yourself by exploring the financial resources on our website or attending one of our free financial seminars.
Creating a budget is not a “one and done” project. Once you’ve built your budget, review it regularly and make adjustments because life changes…just like the seasons.
Save for your future
Saving for retirement should be at the top of your list of long-term budget goals.
While Wisconsin public school employees are fortunate to have the Wisconsin Retirement System (WRS), WRS is not enough. And don’t count on Social Security to fill in the gap. On average, Social Security payments make up only about 14%–28% of retirement income for those who receive WRS. To build a secure retirement, you need three things: WRS, Social Security, and your personal savings.
Personal savings options
You can save with a 403(b) through your district, and if eligible, you can also open an Individual Retirement Account (IRA). With an IRA, and sometimes with the 403(b), you can choose between a pretax or Roth account (see below).
If your employer (or your spouse’s employer) offers a match in your 403(b) plan, take it. It’s free money. Added bonus: The match effectively increases your income without increasing your tax bill, since you pay no taxes on matching contributions until you withdraw them in retirement.
Most Wisconsin public school employees can expect their retirement income to come from:
Wisconsin Retirement System
Start sooner than later
The earlier you start, the more you can benefit from compound earnings. Compounding is when earnings on your investments are reinvested in your account. The reinvested earnings may also have earnings, and then those earnings are reinvested, and so on. This means that contributing a small amount now could benefit you more in the long run than any larger amount you contribute later on. Even modest monthly contributions can grow to several hundred thousand dollars over three or four decades.
Make it automatic
If you have an IRA, making contributions directly from your savings or checking account will make it much easier to save. With Member Benefits, you can set up SmartPlan, or you can use payroll deduction if your district offers it.
If you haven’t started saving for retirement yet, give us a call. We can help you open an account or simply answer any questions you may have.
Brush up on investing terms
Now that you’ve decided to start saving for retirement, what do you need to know? Here are a few investing terms to familiarize yourself with.
Pretax vs. Roth (after-tax)
Traditional (pretax) accounts allow you to defer the taxes on your contributions and at the same time reduce your taxable income. The earnings grow tax-deferred but both the earnings and initial investment will be taxed when withdrawn.
Roth accounts allow for after-tax contributions. You pay taxes now in exchange for tax-free treatment of earnings on qualified withdrawals.
Having a variety of investments in your portfolio helps manage risk. Historically, it also yields higher returns as the positive performance of some investments offset the negative performance of others.
Before you consider any investment, you need to understand risk and determine your personal risk tolerance. Lower risk investments have averaged modest long-term historical returns. Higher-risk investments, such as large company, small company, and foreign stocks, have averaged higher returns historically, but with more volatility or fluctuation in value. Learn your risk tolerance by using our “What kind of investor are you?” calculator.
This is how you divide your money among stocks, bonds, and short-term reserves. The aim is to control risk by diversifying your portfolio. Your allocation should be based on your tolerance for risk.
The impact of fees over time on your IRA or 403(b) account can significantly reduce your nest egg. Pay attention to all of the costs, including plan fees and mutual fund expense ratios. Not all providers or funds charge the same fees. Visit weabenefits.com/fees to learn more.
Member Benefits’ investment options include plug-and-play options for those with less time or inclination to monitor their portfolio allocation, as well as do-it-yourself investing for a more hands on approach. Visit our investment choices page for more information.
Investors should understand the fees and risks involved in making investments, including interest rate risk, credit risk and market risk. The value of market investments can vary; investors can lose some or all of their principal
Don’t let frozen water put you on thin ice
To help reduce the risk to your home:
- Make sure your gutters are clear of leaves and debris.
- Keep the attic well-ventilated.
- Make sure the attic floor is well-insulated.
- After a heavy winter storm, remove a layer of snow at least three feet above the gutter line with a long-handled aluminum roof rake while you stay safely on the ground.
- Water damage from ice dams is generally covered on your home insurance policy, but exclusions may apply. Be sure to read your policy carefully and contact your insurance company right away if you have damage.
To help reduce the risk of falls:
- Clean your walks promptly after a snowfall to keep snow from bonding to the surface.
- Spread sand or gravel on icy patches to make your sidewalk safer for pedestrians. Spreading sand on a sidewalk before ice forms can also make future ice easier to remove. Free sand may be available in your community.
- Pile snow in a place where it will not run across your sidewalk when it melts, and aim your downspouts away from areas where people walk to keep your sidewalks clear during freeze-thaw cycles.
As a homeowner, it’s your responsibility to keep your property safe. Removing snow and ice from your property as soon as possible will help prevent visitors from injuring themselves on slippery walkways, stairs, or entryways.
If someone is injured, you may be held liable for their medical expenses, lost wages, and even pain and suffering. Your home insurance offers protection against financial loss for claims, but preventing a claim in the first place is to your advantage. Many companies will raise rates or cancel policies depending on the situation.
To help reduce the risk to your home:
- Fit exposed pipes with insulation sleeves or wrapping.
- Seal cracks and holes in outside walls.
- Keep cabinet doors open to allow warm air to circulate around pipes.
- Let warm water drip overnight, especially from a faucet on an outside wall.
- Water damage from frozen pipes is generally covered, but several exclusions do apply.
If you have any questions about your home insurance with Member Benefits, please contact us at 1-800-279-4030.
Boat or RV in your future?
Based on the type of item you purchase and the way you intend to use it, we can help you understand the best way to insure it. Many of these “toys” have unique needs, and your policy should be written accordingly.
Examples of recreational toys we cover include:
- Boat, jet ski
- Camper, RV
- Motorcycle, moped
- ATV, UTV
- Travel trailer
- Golf cart