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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 Security

You’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 Insurance

Life 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 Insurance

Health 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 Insurance

This 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 Insurance

Long 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 Insurance

Homeowners 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 Insurance

Auto 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 Planning

Another 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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