Prepare for the unexpected

You can't know what the future will hold — but you can prepare for whatever may come

Life doesn't always go according to plan. Unexpected events like job loss, disability and health care emergencies can affect your ability to reach your financial goals. Today's economic realities — unemployment, rising taxes, and constantly changing markets — can make the prospect of facing the unexpected seem even more likely.

When it comes to feeling prepared for the unexpected, you may be wondering:

• Would I be able to maintain my lifestyle if I lost my job?
• How can I protect my family and the things I care about from the unexpected?
• What would happen to the people I care about when I pass away?

While you can't know what the future holds, there are simple steps you can take today to help you:

• Feel more prepared for job loss or other financial emergencies
• Protect your family and the things you care about
• Care for your loved ones when you pass away

Feel more prepared for job loss or other financial emergencies

Build your emergency cash reserve

Set aside three to six months of living expenses — or perhaps more, depending on your circumstances — in an emergency cash reserve. Cash reserves help you handle emergencies without dipping into long-term investments. A financial advisor can help you determine how large your emergency fund should be. In addition, a financial advisor can help you find secure saving and investing vehicles for your emergency fund.

Tip: To calculate the size of your emergency fund, consider how long it may realistically take you to find a job. Today's high unemployment rates are causing most job searches to take longer than usual.

Leverage the value in your home

Understand how you can leverage the value of your home in an emergency. A home equity line of credit (HELOC) can augment an emergency cash reserve, if absolutely necessary. It may provide you with emergency cash, when you need it, while keeping your long-term investment strategy intact. A financial advisor can work with you on sensible home-borrowing strategies.

Tip: One of the benefits of borrowing through a HELOC is that you only pay on the funds you use. For example, if you have a $50,000 HELOC and only use $10,000, you only pay interest on the $10,000 balance. Plus, in some situations, you may be able to deduct loan interest.

Reduce or eliminate debt

Today's economic situation has taught us all that too much or the wrong type of debt can be a serious threat to financial well-being. Pay down or eliminate your high-interest credit cards, and consider transferring your balances to a card that offers lower interest rates.

Ask an Ameriprise financial advisor about credit cards that offer low rates, no annual fee, no pre-set spending limit and meaningful rewards.

Manage your retirement assets

The markets have changed dramatically over the last few years. That means it's more important than ever to closely monitor your investments. Do you have 401(k) accounts with previous employers? Rolling over your retirement assets into a single IRA can help you monitor and manage your retirement assets more easily all in one place. Knowing the status of all your saving and investment accounts can help you feel prepared for an unexpected situation.

Protect your family and the things you care about

Build an adequate protection plan

It can be difficult to determine how much insurance protection is enough. A financial advisor can offer you a comprehensive protection review. During this simple review, an advisor will take you through a series of questions that can help you uncover hidden gaps in your protection strategies.

Consider long-term care and disability income insurance

Two common gaps in many people's protection plan include long-term care and disability protection. Most people feel that long-term illnesses or disability will not affect them or that they have this protection through their employer. But they don't think about the fact that they lose this protection in the event of a layoff. These policy types can be remarkably affordable for those who are still young and healthy. That's why it's important to plan ahead.

Care for your loved-ones when you pass away

While preparing for the unexpected, don't forget to think about protecting your family and all the people you care about after you pass away. A comprehensive protection review will not only provide you with insights on your protection strategies while you are alive, it can also help you find gaps in your estate plan.

Here are some important estate planning issues an advisor can help you with:

• Finding efficient and effective ways to transfer your wealth
• Planning to provide financial stability to your surviving spouse and children
• Protecting your assets for future generations
• Building a succession plan for a family business

Contact an Ameriprise financial advisor to schedule a New Perspective review. This complimentary review will provide you with an overview of your complete financial situation and clear steps you can take right now so you can feel more prepared for the unexpected.