How to prepare for the unexpected in 3 key areas

Over the last few years, more investors have shifted their financial priorities and sharpened their focus on managing money. In fact, more than six in 10 investors place a heightened importance on protecting their finances, according to the Financial Priorities study1 from Ameriprise Financial.

Specifically, the study revealed:

  • 62% of respondents said financially preparing for uncertainty is more important.
  • 47% said this will be of long-lasting importance.

Your Ameriprise financial advisor will help you assess the long-term impact of shifting priorities and uncertainties. With their support, here are actions to consider across three key areas. 

Investment growth

  • Stocks. One approach to growing savings over time is to implement a diversified, long-term investment portfolio based on personalized recommendations from your advisor. This likely includes growth-oriented investments (stocks). Your advisor will factor in your financial goals, time horizon and risk tolerance as well as market cycles over time.
  • 401(k) account match. If your employer offers a 401(k) plan, consider contributing at least the amount they will match. Generally, contributions are pre-tax, which can help reduce taxable income. The account grows tax-deferred until you retire and take eligible withdrawals for income.

Safeguards for assets

  • Legal documents. A will, health care directive and power of attorney are important documents to ensure your wishes are known. If you don’t currently work with an estate attorney, your advisor can refer you to one.
  • Beneficiaries. Beneficiaries named on your financial accounts override your will. For that reason, it’s important to keep your beneficiary designations current, especially after a major life change such as a birth, divorce or marriage. Beneficiaries can be people or entities, such as a trust or non-profit.
  • Insurance. Life insurance can help protect your retirement income and provide funds for major expenses. And disability income insurance can help replace a paycheck if you become disabled or unable to work for an extended period of time. These are just two possibilities. If you haven’t done so recently, connect with your advisor to review your insurance needs.

Savings, expenses and debt

  • Emergency savings. When a financial emergency arises, a cash reserve can help you pay for it without impacting your financial goals. In general, keep three to six months of living expenses in a safe, liquid cash account. Because your cash reserve is the first line of protection against a financial setback, your advisor can recommend an amount appropriate for your situation.
  • Expenses. If you experience job loss or uncertainty about your income, review and revise expenses, where possible. Consider purchases by category — such as entertainment, dining out or convenience buys — to identify potential savings.
  • Debt. If you hold high-interest debt, your financial advisor can help you decide whether to pay it off ahead of saving for specific financial goals. However, not all debt is bad debt. For lower-interest debt such as a mortgage or student loan, it may make sense to stick to the minimum payment schedule if you earn more from investing than you would pay in loan interest. You might also consider the potential tax advantages of certain debt.

While the future can be uncertain, it’s possible to be prepared

Your Ameriprise financial advisor plays an important role in helping you assess the long-term impact of shifting priorities and uncertainties. The personalized advice they provide can help you navigate life’s twists and turns and stay on track to achieve your biggest financial goals.