Which Money Issues Keep Americans Up At Night?

April 22, 2015  |  

There are two financial situations Americans worry about the most, according to Northwestern Mutual’s 2015 Planning and Progress Study, which surveyed more 2,000 Americans in January: financial emergencies and not being about to retire comfortably.

America frets over these two money issues more than anything else–even though one can plan for both. You can create an emergency fund, and you can have a retirement account.

The survey found that of the top five fears, four were about emergencies and retirement, reports Business Insider.

So make a plan.

For emergency funds, consider creating two: one for short-term, another for long-term emergencies.

A short-term emergency fund should only be used when you have an immediate emergency, such as a car breaking down or a washing machine needs fixing.  “It should be in an accessible account, which will probably bear little interest. The most important consideration is accessibility. You’ll want a debit card attached to this account and check-writing privileges as well,” reports Money Crashers.

On the other hand, a long-term emergency fund is for large-scale emergencies, such as unemployment or a major natural disaster.

If you haven’t starting saving for retirement, you are not alone. According to the Department of Labor, less than half of Americans have figured out how much they need to save for retirement. And since the average American spends 20 years in retirement, you should start planning early.

Saving for your retirement is also a matter of planning ahead. The U.S. DOL suggests a few steps:

–Begin saving–now! Set monthly savings goals and stick to them.

–Calculate your retirement needs. “Retirement is expensive. Experts estimate that you will need at least 70 percent of your retirement income – lower earners, 90 percent or more – to maintain your standard of living when you stop working. Take charge of your financial future,” reports the DOL.

–Contribute to your employer’s retirement savings plan. If your company offer’s a plan, such as a 401(k) plan, enroll and contribute all you can. Also find out about your employer’s pension plan to see if you are covered.

— Never touch your retirement savings.

–Save into an Individual Retirement Account (IRA). “You can put up to $5,500 a year into an Individual Retirement Account (IRA); you can contribute even more if you are 50 or older. You can also start with much less. IRAs also provide tax advantages, reports the DOL.

With IRAs, there are two options – a traditional IRA or a Roth IRA. Your taxes on your contributions and withdrawals depend on which you choose, so do your research first.

–Know your Social Security benefits.

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