FINANCIAL FOCUS
KRISTI TREVINO
Financial Advisor
Edward Jones
www.edwardjones.com/kristi-trevino
Work to Achieve Your
FINANCIAL INDEPENDENCE
Over the past few months, just about
everyone has felt the loss of some type of
freedom, whether it’s being able to travel,
engage in social gatherings or participate
in other activities we previously took for
granted. Still, as we prepare to observe Independence
Day, it’s comforting to realize all the freedoms we still
have in this country. And taking the right steps can also
help you achieve your financial independence.
Here are some moves to consider:
• Build an emergency fund. It’s a good idea to create
an emergency fund consisting of three to six months’
worth of living expenses, with the money held in a
liquid, low-risk account. With this fund in place, you
can avoid dipping into your long-term investments to
pay for short-term, unexpected costs.
• Keep your debts under control. It’s not easy to do,
but if you can consistently minimize your debt load,
you can have more money to invest for the future and
move closer toward achieving your financial liberty.
One way to keep your debts down is to establish a
budget and stick to it, so you can avoid unnecessary
spending.
• Contribute as much as possible to your retirement
plans. The more money you can save for retirement,
the greater your feelings of financial independence.
So it’s essential that you contribute as much as you
can to your 401(k) or similar employer-sponsored
retirement plan. At a minimum, put in enough to
earn your employer’s match, if one is offered, and
every time your salary goes up, boost your annual
contributions. Even if you participate in a 401(k),
you’re probably also still eligible to contribute to an
IRA, which can help you build even more funds for
retirement. And because you can fund an IRA with
virtually any type of investment, you can broaden
your portfolio mix.
• Explore long-term care coverage. One day, your
financial independence could be threatened by your
need for some type of long-term care. It now costs,
on average, over $100,000 for a private room in a
nursing home and more than $50,000 for the services
of a home health aide, according to Genworth, an
insurance company. Most of these costs won’t be
covered by Medicare, either, so, if you want to reduce
the risk of seriously depleting all your financial
resources – or burdening your adult children with
these heavy expenses – you may want to consider
some type of long-term care insurance. You could
choose a traditional long-term care policy – which
can cover a nursing home stay, home health care, or
other services – or a hybrid policy, which provides
long-term care coverage plus a death benefit.
• Manage withdrawals carefully. Once you retire,
your financial freedom will depend a great deal on
how skillful you are in managing the money in your
retirement accounts. Specifically, you need to be
careful about how much you withdraw from these
accounts each year. If you set a withdrawal rate
that’s too high in your early years of retirement, you
might eventually risk outliving your resources. So,
set a withdrawal rate that reflects your age, assets,
retirement lifestyle and other factors. You may want
to consult with a financial professional to establish an
appropriate rate.
As you can see, working toward your financial
independence is a lifelong activity – but it’s worth the
effort.
This article was written by Edward Jones for use by
your local Edward Jones Financial Advisor.
12 MOMENTUM