FINRA Investor Education Foundation on Planning Ahead

Posted on August 14th, 2019 at 4:16 PM
FINRA Investor Education Foundation on Planning Ahead

From the Desk of Jim Eccleston at Eccleston Law LLC:

In June 2019, the FINRA Investor Education Foundation released, “The State of U.S. Financial Capability: The 2018 National Financial Capability Study” (or “The NFCS”), which included some key information for the average American investor. In part one of this two part series on the FINRA study, we will delve into the suggested tips for planning ahead for the financial future and some statistics on where the nation stands as a whole. 

The NFCS suggests that although some financial events like retirement and funding higher education for children are predictable, potential financial “shocks” also need to be accounted for to truly ensure financial stability. For a rounded stability plan, the study suggests the following: rainy day funds, planning for retirement, planning for college, and investing.

Rainy Day funds, or emergency funds, help with events like illness, job loss, economic downturn, and other unpredictable life events. The NFCS suggests that the best way to cope with these events is to have three months’ worth of total expenses set aside in case disaster strikes. The study showed that nearly 49% of respondents to the study have this amount set aside. There was also a direct correlation with those having a higher income are also the ones who have these emergency funds ready.

Planning for retirement is a strong indication of financial stability for the long-term. One of the first steps the average American can take is to demystify the different types of plans (whether it is through an employer or independently) and to study what they personally may need for their retirement needs rather than a “one-size fits all approach”. Interestingly enough, NFCS notes that although the average American now has a stronger ability to meet their general financial needs, this has not had an effect on increasing the amount of Americans saving for retirement over the last ten years.

Planning for college can take up a sizable share of a families resources depending on the amount of children a family has, along with the estimated costs of tuition in the future. As of 2018, about 38% of those with financially dependent children were setting aside money for their children’s education.  

Investing is one of the best ways to plan ahead. Investing in both tax-deferred retirement accounts and non-retirement accounts is something that nearly 46% of non-retired respondents have utilized to help set themselves up for success for the future.

In part two of this series we will discuss the importance of using financial knowledge and decision-making to increase financial stability.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: james eccleston, eccleston law, eccleston law llc, eccleston, finra, financial investor, nfcs, rainy day fund, retirement, savings

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