Living with a blood or bleeding disorder or caring for someone with one can be expensive. It may be hard to think about saving money or even saving for retirement. It’s never too early to start. It can be helpful to learn about how to plan for your financial future.
This section of Finance Basics covers:
Financing Your Retirement Years
Where Should I Start?
Not everyone owns stocks or bonds. Your biggest asset is usually how much money you can earn by working. This is called earning potential. To ensure your financial health, you’ll want to make sure you are earning and growing money now to build a foundation for the future.
Build an Emergency Fund
You should have three to six months of money saved in case of a financial emergency. Having an emergency fund can cover you if you lose your job. An emergency fund can also help if you have to use unpaid medical leave to address a health issue related to your blood or bleeding disorder. How do you know how much money you will need? You’ll have to start by calculating how much money you earn each month and compare it to how much you spend each month.
Figuring out how to build an emergency fund isn’t always easy. In 2022, the personal savings rate was 3.7%.1 This means people save only 3.7% of overall income. For people with bleeding disorders with high medical expenses, savings can be dangerously low.
The best way is to start slowly. The first step is to figure out how much money you earn and how much to save. Here are a few tips to getting started:
- Look at your pay record for a month. Remember to include leave or other benefits.
- Spending is a little more difficult to calculate. Gather your credit card and bank statements. Start adding up all the expenses for the month. This can include your housing costs, utilities, car payment, insurance, food, clothing, and entertainment.
- Remember to include other costs like car or home repairs, maintenance costs. You should also add any unexpected expenses.
Pay Down Your Debt
Debt can be an emotional topic. In 2022, the average American carried $101,915 of debt.3 The debt includes credit cards, mortgages, car payments, and student loans. Those that cannot repay debt may turn to bankruptcy. This is a legal process for those that cannot pay their debt to find relief. A study in 2007 found 62% of all bankruptcies were related to medical expenses.2 Avoiding bankruptcy is a good reason to start to pay down your debt.
The first step is to stop getting new debt. If possible, avoid using credit cards. You can pay the total amount you owe to your credit card company every single month instead of the minimum balance. You can think of your credit card debt as a bill to be paid monthly. In extreme cases you might consider cutting up your credit cards, but it’s best not to cancel the account. Canceling a credit card may negatively impact your credit scores. Your credit score is affected by the amount of available credit you have. Canceling a card will reduce the amount of available credit you have and could lower your score. Credit scores are important because they can affect what kinds of loans you can get or if a landlord will rent to you. Debt repayment won’t work until you stop adding new debt.
The second step is to create an overall debt reduction plan. You will need to figure out how to save a little more each month and use this money to pay off debt. The idea is to pay more than your minimum debt payments. You also want to know if your debt is high interest. Interest is the amount you pay for borrowing money. If you have debts with a high interest rate, paying that debt will be more costly.
Here are some options to think about:
Pay off highest-interest debts first and pay the minimum payment on the rest of your family’s debt. Once the higher-interest debt is paid off, you then pay off the lower-interest debts.
Pay off your family's smallest debts first to build momentum toward paying off the higher-interest debt last.
Pay off debts with the highest emotional toll first. Sometimes this means interest-free debts to family or high-interest debts. The point is to focus on the debts that cause you and your family the most stress.
If you want more information about credit, interest rates, and debt, please go to the Consumer Financial Protection Bureau.
Keep the Money You Have
Finally, you’ll want to make sure to carefully check out all offers and appeals so you don’t fall for a scam. The Better Business Bureau, Snopes, your state Attorney General’s office, and other resources can help you check the background and validity of financial institutions and requests. Talking with your community and doing your research can help ensure the companies you hire are trustworthy.
Here are some important tips:
- Don’t give out your Social Security number or contact information when requested from small businesses unless it is absolutely necessary.
- If a creditor calls, question them carefully to ensure that they are who they say they are.
- Don’t be afraid to forcefully say no if someone is pressuring you for a sale.
- If you think you may have been scammed, contact your state Attorney General’s office to report it. You can also report scams online at the Federal Trade Commission.
Financing Your Retirement Years
Since people with bleeding disorders are living longer, healthier lives, you may spend more years in retirement. It is important to plan ahead for retirement.
Know Your Retirement Accounts
There are two types of retirement plans offered by employers:
This is an employer offered plan and these plans provide a specific amount of money every month for the length of the retirement.
These are 401(k)s and 403(b)s. They are funded by contributions from the recipient. They can be matched by the employer and grow through investment in mutual funds.
In addition to employee-based retirement plans, there are other ways to help you plan on retirement:
These are Individual Retirement Accounts (IRA) and Roth IRAs. They are for individuals and often grow through stock market investments.
This is the government program that most Americans pay into with every paycheck. When you reach the eligibility age, Social Security pays you a monthly benefit based on the number of years you worked and the amount you contributed. Some defined benefits plans may affect social security benefits, as do other factors. For more information about social security benefits, please go to AARP’s Social Security Resource Center.
For an idea of how much money you’ll need in retirement, please go to Retirement Calculator.
Most people today are eligible for defined contribution plans. Here are some things to think about:
Some employers will match your contributions to your 401(k) up to a certain amount. If possible, take the maximum the employer provides.
Stocks and bonds are two types of investment. Stocks tend to be high risk, but with the high risk you might get more from the stock. Bonds tend to be lower risk. But you may not get as much from a bond. Depending on how many more years you think you’ll be able to work, you’ll want to decide how risky you want your investments to be. The closer you are to retirement, the less risky your investments should be. You can also have a mix of stocks and bonds.
You can usually choose to take the dividends earned by your investments in cash or reinvest them into the account. It’s often best to reinvest. The more you invest the more the fund grows.
After considering all your options, it’s a good idea to talk to a professional at your bank or at the Financial Planning Association to make sure your plan will meet your future needs. For more information about financing your retirement, please go tothe Financial Planning Association.
- BEA. (2023, February 24). National Data: National Income and Product Accounts. Bureau of Economic Analysis Interactive Data Application. https://apps.bea.gov/iTable/?reqid=19&step=3&isuri=1&1921=survey&1903=76
- Himmelstein, D. U., Thorne, D., Warren, E., & Woolhandler, S. (2009). Medical bankruptcy in the United States, 2007: results of a national study. The American Journal of Medicine, 122(8), 741–746. https://doi.org/10.1016/j.amjmed.2009.04.012
- Horymski, C. (2023, February 24). Average Consumer Debt Levels Increase in 2022. Experian. https://www.experian.com/blogs/ask-experian/research/consumer-debt-study/