What the experts say
Preparing for a financial emergency
Not having an emergency fund “can cause financial problems far beyond a short-term cash crunch,” said Ann Carrns in The New York Times. A new analysis by the Pew Charitable Trusts found that about 13 percent of working-age people with retirement accounts said they had drawn on their nest egg in the previous year, and had also suffered a financial setback, such as a job loss, illness, or car repair. “Just 2 percent said they had made a withdrawal but hadn’t had a financial shock.” Relying on retirement savings to get through a rough patch can be a costly decision, mostly because “it’s hard to catch back up.” Regularly contributing to an emergency savings account is your best preemptive strategy. Start with small, concrete goals, and consider creating an automatic savings plan with your bank.
Talking retirement with your parents
“Is it time to have the talk?” asked Kathryn Vasel in CNN.com. Discussing your parents’ retirement plans with them might be “as uncomfortable as the talk they gave you about the birds and the bees. But it still needs to happen.” Knowing how they plan to finance their retirement can “provide clarity about their financial security and give a glimpse of any potential gaps or help they might need in the future.” Break the ice by checking if they have a will and asking about their aspirations. Do they plan to travel or relocate? Query “how and where” their funds are invested and if they carry any debt, which can “delay or derail retirement plans.” Finally, verify their health coverage and whether they have long-term-care insurance, and review their Social Security.
How to shop for flood insurance
Flood insurance is worthy of consideration “whether or not you live in a high-risk area,” said Kimberly Lankford in Kiplinger’s. More than 20 percent of flood insurance claims in the U.S. come from homes “outside of highrisk flood zones.” Most homeowners can obtain coverage through the National Flood Insurance Program for “as little as $450 a year for the maximum” coverage; you can also supplement or replace that with private insurance. The NFIP caps policies at $250,000 for your home and $100,000 for belongings, and requires a 30-day waiting period. Many private policies can be approved after just three days, but cost roughly $100 more per year. Installing flood-mitigation features, such as flood vents, can lower rates. “Shopping around helps, too.” ■