Last week I quoted Barbara O’Neill, Cooperative Extension specialist at Rutgers University, as she addressed concerns of New Jersey citizens. Here is the conclusion of her thoughts.
"As a recent breast cancer survivor, I can personally relate to people who question what the future holds. This is how some people think when they’re diagnosed with cancer or another life-threatening disease. All illusions of immortality (or at least living to a ripe old age) are shattered. They wonder if they’ll live long enough to retire.
"It’s a very unsettling feeling. It can also lead to actions that are counter-productive for you and others. It is important, both emotionally and financially, to enjoy every day, do fun things with family and friends, and believe you have a future and plan for it.
"What does the future hold? Of course, nobody knows. The past (e.g., Pearl Harbor and World War II) is not particularly instructive now because we are in uncharted territory with the anthrax scare. What we do know is that people who control what they can about a bad situation often have an easier time coping than those who don’t. Below are five prudent precautions for these uncertain times:
- Maintain an emergency cash reserve of three to six months for expenses. Keep this money in more than one place, such as both a bank and a money market mutual fund. Also keep some small-denomination bills on hand (similar to preparations last year for Y2K).
- Back up all of your computer files, especially personal finance records, and keep your virus software updated.
- Keep a reasonable amount of canned foods and bottled water at home in case food supplies are disrupted (this is prudent in case of a winter storm anyway).
- Prepare a will and review beneficiary designations on IRAs and other retirement accounts. Name a contingent executor and beneficiaries for estate planning flexibility. Also, get your financial records in order, prepare a living will, and get a life insurance needs analysis if you think you don’t have sufficient coverage to protect your dependents.
- Believe that you have a bright future and act and invest accordingly. To do otherwise jeopardizes your financial security and that of your family. Next year, there will be increased contribution limits and catch-up provisions (for persons age 50 and over) for both IRAs and tax-deferred employer retirement plans. Make the most of them."