How to Face Your Biggest Financial Fears

Boo! Halloween can be fun if you enjoy dressing up or seeing others dress up. It’s also a season when some people like to “scare themselves” with scary costumes, movies, Stephen King novels and haunted houses!

The truth is, many people enjoy being temporarily frightened—a phenomenon confirmed by science. Of course, a scary movie or haunted house is just make-believe, and we know it will be over soon. On the other hand, financial fears aren’t so fun—especially if you don’t know how to make them stop!

Your money fears may make you feel like hiding under the bed. But knowing how to face them can help you regain a sense of peace and control. Today, we look at some of the biggest financial fears, and how to deal with them constructively!

Afraid of running out of money in retirement? 

In survey after survey, this usually tops the financial fears of baby boomers and retirees. It’s not an unfounded fear, given that 21% of Americans have nothing at all saved for retirement, according to a 2018 Northwest Mutual study. A recent Bankrate study shows that at least 40 percent of Americans are saving less than five percent of their income—if they save anything at all.

You can face the retirement monster with these strategies:

First, save a larger percentage of your income. We recommend saving 15 to 20%. If that seems far-fetched, start where you are and increase it each year. Or increase your savings when you get a raise or a bonus or when you pay off a car loan or credit card.

Second, plan on working longer. Perhaps you’ll work part time or seasonally, but reconsider retiring at 65. It’s an arbitrary number that only makes people feel like they “should” be ready to retire—even if they’re not! Plus, work can add purpose and meaning to our lives, giving us a reason to get up in the morning along with a social circle.

Even if you can afford to retire at 65, consider how you can keep using your gifts and making a contribution, perhaps through volunteering.

Time to re-think retirement? Kim Butler’s book, Busting the Retirement Lies has seven steps and many inspirational stories to help you design a future you’ll love.

Afraid you’ll never retire?

If you don’t enjoy your work, then working longer than you planned can be a scary thought! But many of us think about workand retirement all wrong. We think that retirement is the “reward” we get for doing work we don’t enjoy! But if you don’t enjoy what you do, why would you want to keep doing it until you are 65 or 70?

The key is to find work that you love. After all, your most valuable asset is your time. It is the only asset that can’t be renewed or replaced. With that in mind, spend your time doing work that you enjoy. Find work that you absolutely love, and you won’t want to give it up!

The most successful people love their work. They have no desire to retire, although they may cut back and spend more time travelling and visiting loved ones. Many people also find work in their later years is more profitable and rewarding. After all, they are benefiting from a lifetime of experience! Did you know that Warren Buffet made the majority of his wealth after age 66? (See this MarketWatch chart.)

You’re never too old to invest in yourself. Many people use their “retirement” to launch a new career or freelance business, doing something they’ve always wanted to do! We’ve met authors, coaches, bakers, consultants, artists, professional speakers and travel coordinators. The possibilities are endless! The key is discovering what you love to do.

And of course, follow our tip above to save more. That will ensure that when you DO wish to retire, you can!

Some resources to help you reinvent yourself:

Tammi Brannan helps people discover their unique purpose and path through the “Blueprint Process.” It’s not traditional “career counseling…” we think it’s better! (Tammi is also Kim Butler’s sister and a popular speaker at our advisor conference each year.)

Udacity.com offers “nanodegrees” many rising fields, including programming and AI.

We review John Tarnoff’s book, Boomer Reinvention in: “Your Next Act: Reinventing Your Career Past 50.”

Afraid of a stock market crash?

This is a very rational fear, given that the bull market will not go on forever! The stock market has shown signs of volatility and strain this year. In August, we published an article warning our clients that it may be a good time to get out of the stock market: “Is Now the Time to Go to Cash? 7 Signs Say ‘Yes’.”

Since that article was published on August 9, we’ve seen the S & P 500 drop 7% from its September high to its October low, a loss of 200 points. This leaves the stock market at just over a paltry 1% year-to-date gain. That may be more disappointing than disastrous, but the worst may be yet to come.

To prepare for a stock market crash, correction or bear market, re-allocate your assets. Move the bulk of your money currently in equities elsewhere where you can avoid the peaks and valleys. Put more of your money outside of the stock market in savings vehicles or alternative investments that are non-correlated to the stock market.

Some of our favorite assets include:

Cash. Right now your money and your nerves may be better off with a savings account until the storm is over! Read about several cash alternatives in “12 Ways to Prepare a Portfolio for a Bear Market.”

Non-correlated alternative investments. Right now is a smart time to invest outside of the stock market. Learn about assets such as life settlements (which are immune to market fluctuations) this article: “Crash Proof Your Portfolio with Non-Correlated Alternative Assets.”

High cash value whole life insurance. This long-term savings vehicle beats bank rates on the cash side, while offering tax-advantaged growth and an additional death benefit. Read “Where You Should Keep Your Cash Savings” to find out more.

There are MANY ways to diversify your portfolio and invest outside of the stock market. If you would like a complimentary consultation to see which strategies and vehicles might make sense for your situation, email [email protected] with “Consultation Request” in the subject line.

Afraid of a real estate downturn?

This is also a very reasonable fear! Real estate can be a wonderful alternative investment, but right now, both stocks and real estate may be in bubbles. Seasoned real estate investors are concerned that prices in some markets have peaked. It has also become increasingly difficult to find rentals that can generate healthy cash flow.

Exercise extreme caution in the real estate market right now. This is NOT a good time to speculate with land or try to “flip” houses. There are still some situations where buying may make sense—but only if the math works. I.e.: don’t buy for appreciation, buy for cash flow.

Three real estate moves we like right now:

Stop paying rent. If you can stop paying your landlord and instead purchase a home with comparable mortgage payments and a low down payment, it’s a win. Read “A Home-Buyer’s Guide for Wealth Builders.”

Cash-flowing rental real estate in markets with a strong job market. If the numbers are solid and you’re buying for the long-term and not for appreciation, this could be a good move. (You might even get a nice tax break, as we covered in “The New Tax Plan Explained.”)

Oil and gas land leases. These are short-term secured opportunities that offer excellent cash flow.

Afraid your family is unprepared for a worst-case scenario? 

Unfortunately, many families are indeed unprepared. According to a survey cited in MoneyTips.com, 70% of Americans don’t have a life insurance policy—including 75% of millennial parents! If you have dependents who count on you and no life insurance—please put “life insurance” on your highest priority “to do” list today.

Of course, life insurance doesn’t just protect dependents. It replaces income for widowed spouses, protects businesses, equalizes estates, provides legacy gifts and offers living benefits. Many consumers think of life insurance as “death insurance,” but a good policy can offer:

• Tax-advantaged savings
• Collateral for personal or business loans
• Long-term care insurance benefits
• Critical or terminal illness benefits
• Even benefits in the event of disability.

Ready to face your fears of mortality?

Skip the haunted house and schedule an appointment with Kim Butler. Kim is a recognized expert in high cash value whole life insurance (which can offer all of the benefits above). Her firm also offers convertible term insurance, which is affordable for young families and can be converted to whole life.

Afraid of medical bills you won’t be able to pay?

According to Fool.com, medical bills are at least a contributing cause to many bankruptcies in the United States. Medical debt is a serious problem to those facing it.

There are two important ways to protect yourself from unmanageable medical bills:

First, obtain appropriate healthcare coverage (insurance, medicare, or an alternative) pro-actively. Many Americans either get health insurance from an employer, or live without. Some people qualify for subsidized policies under the ACA (Affordable Care Act), while others struggle to make the new higher premium payments for ACA-approved policies. Sometimes, people assume they can’t afford coverage. Yet alternatives are available.

Temporary healthcare insurance is surprisingly affordable, and now it can be obtained for up to one year and renewed for three. This type of insurance won’t help those with chronic pre-existing conditions, but it can be perfect for young, healthy people who were priced out of Obamacare policies and don’t have benefits through work.

Another Obamacare alternative gaining popularity is medical cost sharing plansoffered by various religious organizations. There are typically some restrictions in what the plans cover and they may not be a “fit” for you. However, they have provided a welcome solution for many families.

If you are 65 or older, you’ll want to get informed about your medicare options. People often incorrectly assume it covers all medical bills or fail to sign up for the best option. According to Dr. Katy Votava of Goodcare.com (a consultancy firm we recommend for healthcare advice), 9 out of 10 Medicare beneficiaries pay more out-of-pocket for their medical care than necessary.

Second, put your fears to positive work by staying healthy. Replace junk food and other negative habits with healthy ones. Add fresh fruits, vegetables, exercise and gratitude to your daily routine. Use new technology such as the Oura Ring to get a better night’s sleep.

The correlation between health and wealth is undeniable, and the relationship is something of an upward spiral. According to a Time.com article, “Why Healthier Means Wealthier,” healthy people earn as much as three times more than people with poor health. Healthy people are not likely to be forced into early retirement and also deplete their savings more slowly (having fewer medical bills).

And remember—stress is not good for your health! So take positive action on your financial fears rather than ignoring them.

Facing Your Financial Fears

Unlike imaginary monsters under the bed, ignoring problems won’t make them go away. While this might seem obvious, many people procrastinate when it comes to financial matters.

Let this Halloween fright season be a reminder to face your fears—especially your biggest financial fears. It’s time to stop avoiding important things. Taking action now can bring piece of mind and help you avoid a real “horror story” later.

Need help? Partners for Prosperity is here to assist you with:

• Life insurance
• Alternative investments
• A new financial strategy
• Or simply when you have a question or need a sounding board.

We look forward to serving you!