As we march deeper into October, we also creep ever closer to the spookiest time of year: Halloween. This is the season where we all come together to celebrate ghosts, goblins, ghouls, and all the other scary things that keep us up at night.

But one thing that should never be on that list is your money. And yet, many Americans report feeling anxious over their financial situation. In fact, a recent survey by LendingTree found that 56% of Americans are worried about their financial situation, with over a third losing sleep over it.

Yes, money is important. But it’s only a tool to help us live our lives the way we want. And while you may feel anxious, nervous, or even afraid of some aspect of your financial situation, it’s helpful to remember that there’s always something you can do about it.

With that, here are three common financial fears and what you can do to conquer them.

Fear #1: Outliving Your Money

If you’re a recent retiree or close to retirement, this should come as no surprise. In fact, “outliving your money” is often cited as the top fear among retirees. And it makes sense why you might feel this way. We’re living longer than ever before, so having 20 years’ worth of retirement income built up might not be enough. Plus, we’re still living in a high inflationary environment, which means our dollars aren’t quite going as far as they used to.

These are all scary things, but with a well-constructed financial plan, you should have no reason to worry! That’s because there are strategies you can implement to make your retirement savings last. Here are three of them:

Plan Your Retirement Income

Step one is identifying where your income will come from in retirement. That includes creating a strategy for retirement account distributions and Social Security withdrawals. And remember: When you decide to draw from your Social Security benefit permanently impacts the size of your payments, so make sure you clearly define your Social Security claiming strategy.

Effectively Diversify Your Portfolio

Traditional views of diversification tend to focus on asset classes (e.g., equity, fixed income, etc.). Although holding various asset classes can help steer you towards diversification, they don't go far enough to provide meaningful risk mitigation. Creating effective diversification requires considering an asset's underlying source of risk. Diversifying across the underlying source of risk, whether it's related to the yield curve, the performance of a company, or the inflation environment, is the core of a solid diversification strategy. And while diversification isn’t a guaranteed strategy against investment losses, it at least puts you in a position to mitigate potential losses.

Plan for Tax-Efficient Withdrawals

Investment diversification also isn’t enough. You also need to employ a tax diversification strategy, i.e. place assets into various accounts based on their tax treatment: taxable, tax-deferred, or tax-advantaged. Tax diversification offers several distinct benefits, like:

• Flexibility to draw income from different sources depending on your tax situation and changes in overall life circumstances
• May help your portfolio last longer
• Allows you to hedge your portfolio against the direction of tax rates, which could be higher in the future

At the end of the day, we believe smart tax planning helps to enhance the return on your investments, which seeks to increase the likelihood you’ll achieve your financial goals. It also allows you to find the smartest place to draw money from during each phase of your retirement—helping to ensure you don’t run out.

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Fear #2: Being Unable to Retire

Many people in the workforce worry they’re not doing enough or saving enough to retire. But there’s no magic number you need to reach in order to retire. Retiring is a process—not a point in time. So, you shouldn’t look at it as just crossing a finish line. It’s about running the whole race and hitting the checkpoints you need to move that finish line wherever you want it to be. Here are five things you can do to help ensure you’re on the right track:

1. Identify a Target Date

Start by picturing your ideal retirement. What do you plan on doing? Where do you plan on living? And how much do you envision spending on a monthly/yearly basis? Once you figure that all out, determine how you plan on paying for those expenses. Based on your savings, investments, and other income streams, you can calculate where that money is coming from—and how long it’ll take you to have enough.

2. Prepare to Switch From Saving to Spending

As you work towards your retirement, you’re in saving mode. You spend what you need to live your life the way you want, and anything leftover gets put into your retirement accounts. But once you enter retirement, you need to start spending the money in those accounts. Strategic asset allocation, as in spreading your assets between those three types of taxable accounts (taxable, tax-deferred, and tax-advantaged), can help provide you with a steady stream of retirement income—both tomorrow and 20 years down the road.

3. Plan for Your Health Care Needs

Health care likely isn’t top of mind for those in the workforce because many jobs offer medical coverage to their employees. But what happens when you stop working? Make sure you have an idea of where your health care will come from once you retire. For most, that will be Medicare, but there are other things you need to consider, like long-term care (LTC). You may want to start thinking about LTC insurance and how that may factor into your retirement plan.

4. Lock in Your Defined Benefit Strategy

Next, when you’re two or three years away from retirement, it’s a good idea to reassess your defined benefit strategy. Make sure your plan for claiming Social Security and any income from pensions still works with the overall financial plan that you put in place. And remember what we mentioned earlier about Social Security: Your age when you start claiming has a permanent effect on how much you’ll receive.

5. Take It for a Test Drive

At this point, you should know about how much you’ll be receiving in retirement income. So, take it for a spin! Live your life under these parameters and see how it works. You may realize that you may need to make a few tweaks to your plan, or you may find out it fits you like a glove.

Fear #3: Being Unable to Pay for a Child’s Education

It’s no secret that things are expensive these days. Obviously, persistent inflation isn’t helping anything, but some things have been getting much more expensive for far longer than just the last few years. Case in point: college tuition.

As of the 2022-2023 academic calendar, the average annual tuition cost of a public, four-year, and in-state school was $10,940. That’s an 188% increase from when it was $3,800 back in the 1990-1991 school year.

Going for the private school experience? The price skyrockets to nearly $40,000. Multiplied over four years, that’s $160,000. A lot of you probably bought your first house for less than that. And what if you want to send your child to private school before college, or maybe you've got a full house with more than one child? Get ready to watch those expenses multiply.

It’s no wonder this causes anxiety in many adults, but luckily, there are proactive steps you can take now to ease that burden later.

Contribute to an Education Savings Account

Fortunately, programs exist to help you save for educational expenses. While you can contribute to any sort of account your heart desires to save for education (say, for instance, a mutual fund), there are different types of investment accounts that are made specifically for saving for education.

Two of the more popular options include Coverdell education savings accounts (ESAs) and 529 plans. While both accounts offer various tax advantages, they have some key differences that can affect your savings strategy, and 529 plans in particular offer some unique benefits that should be worth considering.

Conquer Your Financial Fears

In our society, we place so much emphasis on money, so it’s no wonder that people feel anxious, confused, or even scared about some part of their financial situation. Money is important, but it’s never the goal; it’s simply a tool to help you achieve your goals.

Whatever your financial fear, whether it’s mentioned above, or something left off this list (like feeling overwhelmed by debt or worrying you don’t have enough saved up in case of unexpected emergencies), remember that there’s always something you can do about it.

Your team at Wealth Enhancement Group has decades of experience and has seen it all. Nothing scares us, and we’re here to help you conquer your financial fears. Reach out today for a free consultation.