Top financial fears and how to overcome them

Just as Halloween invites us to face the spooky and strange, our financial fears can often lurk in the shadows, causing stress and sleepless nights. From rising costs and market uncertainty to increased debt and decreased savings, many financial worries can haunt our minds. Thankfully, by boosting financial knowledge and adopting a few healthy habits, we can unmask those fears and confidently take charge of our finances.

Not having money for an emergency

According to a recent study, over 27% of Americans have no emergency savings set aside for unexpected expenses, like medical bills, home and car repairs, or the loss of income, and nearly 40% say they couldn’t afford an emergency expense over $400. Oftentimes, other financial priorities can get in the way of creating an emergency fund, but this can lead to a great deal of stress if there is a sudden need for money.

Solution: Create an emergency fund

Building a financial safety net can feel daunting, but starting small can still have a big impact. An emergency fund differs from a savings account and is designed to cover short-term costs. Start by looking at your budget and deciding how much from your monthly income could go toward building this reserve. Perhaps money could be freed up by cutting back on unnecessary expenses. Whatever the amount, schedule an automatic deposit into this account every month and only tap into these funds if necessary.

Losing money from market volatility

If thinking about the market and its potential impact on your finances causes you to sweat, you’re not alone. About 39% of Americans said the performance of the U.S. economy causes them stress. Many times, not understanding the market cycle or being without a proactive strategy can lead to higher stress levels.

Solution: Build a diversified financial strategy

Combining financial knowledge with a diversified strategy might minimize the effects of a market downturn on a portfolio. For example, adding a fixed index annuity to an overall financial strategy can provide growth potential, while protecting those retirement assets if the market goes down.

Saving for college

For many parents, covering the cost of a child’s education is among their biggest financial worries. Nearly 70% of parents say they’re concerned about having enough funds to pay for college. This can stem from rising tuition costs, not starting to save early enough, and the impact of inflation on their savings. With the average cost of college in the U.S. landing around $38,000 per year, it’s understandable that this expense is a leading concern among many households.

Solution: Develop a college savings strategy

There are several options available for building savings for higher education, including 529 plans, college savings bonds, financial aid, grants, and scholarships. A lesser-known strategy is using permanent life insurance where the insured can access potential cash value through policy loans, which are generally income tax-free.

Leaving behind loved ones

Thinking about leaving your family behind is frightening for anyone, especially if loved ones depend on your paycheck to keep up with the day-to-day costs of living. Around 38% of Americans say their household would face financial hardship within six months should a wage earner die unexpectedly—while 30% would struggle financially within a month.¹ Losing an income earner without a financial safety net can cause a family to have to make tough decisions.

Solution: Consider purchasing life insurance

No matter a person’s age, adding life insurance to a financial plan can be a valuable way to protect the people that matter most to them. Getting coverage is often less expensive than most people think and might work into many budgets. The insured can rest assured knowing their loved ones can pay for final expenses, keep up with bills, and still reach the goals they set together.

Running out of income in retirement

With the average woman in the U.S. living to 80 years old and a man living to age 74, many people are worried they will outlive their savings during a potentially lengthy retirement. For adults 50 and over, 20% say they have no retirement savings, and 61% are worried they will not have enough money to support them as they age. Unfortunately, many are up against challenges including rising health care costs, inflation, and the need to supplement Social Security. And with pensions on the decline, building enough retirement savings is increasingly falling onto the shoulders of the individual.

Solution: Create a retirement income plan

To achieve retirement goals and financially prepare for the next chapter, creating a retirement income plan can help savings last. This often begins with estimating retirement income needs and expenses and then building a plan around these calculations. A savings strategy may include 401(k)s, IRAs, investments, annuities, and retirement savings plans through an employer. Certain fixed index annuities can also be a beneficial addition to an income plan since many can provide guaranteed income that will last throughout retirement. One of the most important actions a person can take in prepping for retirement is to start saving early and keep the well-being of your future self in mind.

Failing to leave a legacy

Many people have a full plate when it comes to financial obligations, and finding time to think about an estate plan can be difficult. Only 32% of Americans have a will. Not having a will or an estate plan can make things challenging for the family.

Solution: Design an estate plan

No matter the income level or stage in life, having a will or an estate plan can help a person leave behind a legacy, not financial and emotional uncertainty.

Seeking help from a financial professional

If you’re feeling full of financial fright, seeking the guidance of a financial professional can help alleviate fears by providing advice, strategic planning, and personalized solutions. With a wealth of knowledge to tap into, they can help demystify complex financial matters, create a clear path to achieving financial goals, and offer reassurance by helping you proactively tackle financial worries and feel more confident in your abilities to manage your finances successfully.

1. LIMRA, 2023 Life Insurance Fact Sheet, 2023 https://www.limra.com/siteassets/newsroom/liam/2023/0859-2023-liam-fact-sheet-2023_final.pdf

Neither Midland National nor its agents give legal or tax advice. Please consult with and rely on a qualified legal or tax advisor before entering into or paying additional premiums with respect to such arrangements.

The primary purpose of life insurance is to provide a death benefit to beneficiaries. Because of the uncertainty surrounding all funding options except savings, it is critical to make personal savings the cornerstone of your college funding program. However, even a well-conceived savings plan can be vulnerable. Should you die prematurely, your savings plan could come to an abrupt end. To protect against this unexpected event, life insurance may be the only vehicle that can help assure the completion of a funding plan. In addition to the financial protection aspect of insurance, the tax-deferred buildup of cash values can be part of your college savings plan. Generally, if the policy is not a Modified Endowment Contract then tax-free withdrawals can be made up to the contract's cost basis. Moreover, if the policy is not a Modified Endowment Contract, then loans in excess of the cost basis are also tax free as long as the policy remains in force.

Estate planning is a complicated legal process, and you should consult an attorney for any legal advice and estate planning.

The term financial professional is not intended to imply engagement in an advisory business in which compensation is not related to sales. Financial professionals that are insurance licensed will be paid a commission on the sale of an insurance product. 1 LIMRA, 2023 Life Insurance Fact Sheet, 2023 https://www.limra.com/siteassets/newsroom/liam/2023/0859-2023-liam-fact-sheet-2023_final.pdf

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