Halloween is quickly approaching! As Americans, we enjoy celebrating this time by having fun with fear. Ghosts, goblins, and witches amuse all ages. But in day-to-day life, the truth is that adults do face real worries. A Chapman University survey found that 50 percent of those surveyed reported being afraid of running out of money.
In reality, Americans are not saving enough for their retirement. One in three Americans has less than $5,000 saved. If you are feeling unsure of your future, it is not too late to save. If you have not signed up for your employer’s retirement plan, such as a 401(k), consider doing so today. If your employer does not offer a plan, open an IRA. Aim to save 10 percent of your income each month.
Another common fear for Americans is facing economic hardship due to an unforeseen catastrophic situation. For a quarter of Americans, just a $400 unexpected expense would cause them to dip into their savings. Additionally, 25 percent of Americans said they had neglected necessary medical care due to costs. To help avoid these situations, or the surprise of any significant unforeseen expense, set up an emergency fund today. A general rule of thumb is to have three to six months savings in the fund. To house your fund, find a savings vehicle that allows easy and quick access to the money, but too easy that you would be tempted to spend it.
While October addresses spooky and creepy fears, the fear of running out of money does not have to be one of them. Talk to your financial advisor about saving for the future.
Claudia Mollerup-Madsen is Vice President and Financial Advisor with the Wealth Management Division of Morgan Stanley in Houston.
