"The race won is the race enjoyed."
-- Christina Nikolov
ChartWatchCentral - Financial
Articles
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Building Your Financial Freedom Does the idea of planning for your
financial future seem too complex or confusing? Do you think you can't save
money because you're barely making ends meet as it is? The sooner you start
planning for the future, the sooner you'll reap the rewards. Use this guide to
help you build your financial freedom.
Social SecurityYou’ve paid into it most of your life, so don’t forget
to include it in your financial planning. The income you receive when you reach
the eligibility age (e.g., 65) is based on the average of your 35 highest salary
years. You also can collect 80% of your benefit at age 62. If you die, your
spouse may be entitled to your benefits. The age at which you can collect full
benefits is currently scheduled to increase gradually to 67. You can check the
record of your earnings and get a statement of your anticipated benefits by
calling Social Security at 800/772-1213.
Life InsuranceLife insurance can help to financially protect your loved
ones in the event of your death. It’s important if you are married and even more
important if you have dependent children. There are several types of life
insurance:
- Term life insurance pays a fixed amount of money to your beneficiary if you
die during the term of the policy. The cost of premiums increases as you get
older.
- Whole life insurance is permanent insurance that provides a death benefit
that is guaranteed for the insured's life as long as premiums are paid.
Participating policies may pay dividends that can increase the policy's cash
value, but they are not guaranteed.
- Universal life insurance is considered a variation of whole life insurance
with more flexibility. Within limits, the policy owner determines the amount and
frequency of his or her premium payments and is permitted to adjust the policy
face amount up or down to reflect changes in his or her needs. As premiums are
paid and cash values accumulate, interest is credited to the policy's
accumulation fund.
- Variable Life Insurance is similar to universal life in that there is
flexibility in connection with premium payments and death benefits. However,
with variable life, premium payments are held in separate accounts, and the
policy owner chooses how the cash value will be invested. Consequently, such a
policy's cash value will fluctuate with the performance of the chosen investment
portfolios.
Health InsuranceHealth coverage protects you in case of sickness or
injury. Without it you run the risk of being financially wiped out by just one
serious illness or accident. Most people receive subsidized health benefits
through their employer, but coverage can also be purchased as an individual.
Disability InsuranceThis is probably one of the most overlooked forms
of insurance for working-age people. Disability coverage replaces a portion of
your income when you can't work because of illness or injury. Most policies
replace 60% to 80% of your income. (You also may receive income from Social
Security for certain disabilities, or from Workers Compensation if you are
injured on the job.) If your employer provides a 60% disability policy, you
might want to consider a supplemental policy covering 20% of your income.
Long Term Care InsuranceLong Term Care insurance is designed to help
pay for nursing home care, assisted living care or home health care expenses.
This fast growing type of insurance can protect you and your assets against the
high cost of long-term care. Most policies pay benefits when long-term care is
prescribed by a physician as medically necessary or when someone can no longer
physically or mentally take care of basic needs.
Homeowners InsuranceHomeowners coverage protects your financial
investment in your home. It provides compensation for damages to your home and
its contents, and it may protect you from financial liability if someone is
injured on your property. The extent and amount of coverage needed depends on
your situation, but if you can afford it, it is wise to insure your home for
100% of its replacement cost.
Auto InsuranceAuto insurance is more than a matter of insuring your
vehicle for loss or repairs after an accident. It is a financial safety net that
can help you offset the cost of bodily injuries to yourself or others, lost
wages due to injury, and lawsuits brought against you as the result of an
accident. Most states require the purchase of basic coverage and then you
determine the additional insurance you need.
Estate PlanningAnother way to safeguard your family’s financial future
is through estate planning. Generally, estate planning includes taking an
inventory of your assets and making a will or establishing a trust, with an
emphasis on minimizing taxes. Estate planning is very complex and subject to
changing laws. You may want to seek professional advice.
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