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Financial Focus

How can you improve your financial fitness?

It’s always smart to stay physically fit. But financial fitness is important, too. Are you doing everything you can to boost your financial well-being?

Financial health is on the minds of many. 70% of Americans say the COVID-19 pandemic caused them to pay more attention to their long-term finances, found in Edward Jones/Age Wave survey, Four Pillars of the New Retirement: What a Difference a Year Makes.

Some feel more positive about their future than others. Baby Boomers came through the pandemic in generally good financial shape, while Gen Z and Millennials felt the greatest negative financial impact. Women’s confidence in retirement savings remains low, as the pandemic widened the economic gender gap, particularly for women of color. Your outlook depends on your demographics.

Regardless of these demographics, take these steps to improve your financial health:

  • Conduct an investment “check-up.” Regular check-ups are key to maintaining good physical health. The same principle applies to your investments. Periodically assess their “vital signs.” Is your portfolio still appropriate for your risk tolerance and time horizon? Does it provide the growth potential you’ll need to achieve your long-term goals? Is it diversified enough, or do you own too many similar investments? Although diversification can’t guarantee profits or protect against all losses, it can reduce the impact of financial market volatility on your portfolio.

  • Take preventive measures. You take medicines, vitamins, and other supplements in an effort to treat existing or prevent future illnesses. You also can, and should, take preventive measures to boost your financial health. Do you have sufficient life and disability insurance? If your family situation changed through divorce, remarriage, or childbirth, have you updated the beneficiary designations on your insurance policies? Have you taken steps to protect your financial independence by addressing the potentially huge costs of long-term care?

  • Avoid unhealthy moves. Smoking, a sedentary lifestyle, and excessive stress are considered unhealthy for our bodies. Some activities are unhealthy for our financial fitness, too. You may be tempted to tap into your IRA or 401(k) to pay for short-term needs. If it isn’t essential or you can obtain other sources of funding, you should avoid touching retirement accounts. Withdrawals may incur taxes and penalties. Just as important, these accounts are intended to provide you with some of the income you’ll need for retirement. The more you deplete them now, the more financial strain may occur during retirement.

Staying physically fit requires determination and work. The same is true for financial fitness. The effort you put into staying financially healthy helps you keep moving toward your financial goals.

Edward Jones. Member SIPC.

Cole Drum - (512) 296-2089

Cole.Drum@edwardjones.com

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