AVOID ‘INCOME SHOCKS’ IN 2018
9 in 10 Will Experience an Income Shock Throughout Their Career – Are You One of Them?
Tips to Help Plan for Income Shocks in 2018
Almost no one is safe from periods of lost income due to a health crisis, job loss or other life transitions during their working years. There are major income disruptions that deeply affect retirement outcomes. These income losses – annual earnings drop of more than 10 percent – are so common that 96 percent of Americans experience four or more of these income shocks by the time they reach age 70.
Smaller setbacks frequently happen too – and have a significant impact on our pocketbooks. A survey recently conducted by SmartAboutMoney.org reveals how prepared Americans are if faced with an emergency expense. Almost two thirds of U.S. adults admit to experiencing a financial setback. Transportation issues, housing repairs/maintenance. and medical care for injury/illness topped the list. And, if faced with a major unexpected expense, over a third of U.S. adults say they’d pay for it with the help of credit card(s) or emergency savings (both 35 percent), closely followed by cash (32 percent).
The start of a new year is a good time to take stock of your finances and prepare for all types of issues and income shocks that can affect them. Ted Beck from SmartAboutMoney.org discusses how to best prepare for times where unexpected expenses or interruption of income could otherwise financially hurt you.
For more information visit SmartAboutMoney.org
This interview is produced for the nonprofit National Endowment for Financial Education.
Related links: Smart About Money