Plan Right Now to Protect Your Income
From businessweek:
“Digging into retirement accounts before retiring is a big no-no. Americans should heed two methods to safeguard savings: set aside a liquid cushion and buy disability insurance.
Concerned about being laid off this year? Hey, it’s a legitimate worry. David Wyss, chief economist for Standard & Poor’s, believes as many as 750,000 Americans will lose their jobs in 2008. That’s why financial planners always advise keeping at least six months’ worth of expenses in a liquid account, like a money-market—advice astonishingly few Americans take. Have you ever worried about becoming disabled? Surprisingly, few Americans have disability insurance either, another huge concern.
Nearly 1 in 5 Americans will become disabled for one year or more before the age of 65, according to the Life Foundation, a nonprofit organization dedicated to helping consumers make smart financial decisions. The number of workers who become disabled has risen by 35% since 2000, according to the Social Security Administration.
Because more Americans know of someone who has been affected by a disability, there is increasing concern about this issue. In fact, a recent survey by Berkshire Life Insurance found that 25% of Americans are worried about losing their jobs within the next six to 12 months because of weakening economic conditions, while 28% are concerned about losing their income because of an accident or illness that would make them unable to work.
The study also revealed that 41% of employees with 401(k) or similar retirement accounts would be willing to borrow from such accounts to cover lost income.
“Taking money from your retirement accounts before you retire is like robbing yourself to pay yourself,” says Larry Hazzard, a senior vice-president at Berkshire Life. “It’s generally not a good idea to stop contributions to your retirement accounts because you….” RRead the rest
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