Home
About Us
Wealth Management
community
News
Resources
Contact Us
Disclosures
Vault
Investor Information
Quarterly Newsletters
In The News
More Articles  Printer Friendly Version

 

Financial Lifeboat Drill For Mustering In Emergencies

Put yourself through this brief lifeboat drill, to prepare for things suddenly going wrong. Everything may be fine right now, in the eleventh year of the economic expansion. That's a sensible time to test your ability to muster the resources to respond to a range of emergency scenarios.

1. Cash. In case you lose your job, lose your health, or are befallen by life's myriad of mishaps, can you pay the bills for at least six months?

2. Investment policy. If the stock market were to fall by 40% over the next year or two, are you ready to ride out the storm — even if it takes a decade to come back? That's approximately what happened in the global financial crisis of 2008. Although this is not in the forecast, a written investment policy statement can eliminate any ambiguity about your investment risk preferences and plan to survive a terrible storm.

3. Family risk. Will your children be able to afford college, will your spouse be able to maintain your family's current lifestyle, and will your other loved ones have the financial wherewithal to carry on if you die? Insurance — specifically no-frills term insurance — is meant to manage the worst of all risks families face.

4. Beneficiary designations. Life changes families. Divorce, death, health, and family financial dynamics change over time, making it necessary to reexamine beneficiaries listed on your retirement and other accounts.

5. Retirement income plan. Retirement income planning is being transformed by U.S. demographic trends and changes to the U.S. Tax Code. A retirement income plan done before the 2018 tax law changes, or that is not in tune with the demographic trends affecting income investing, should be updated.

6. Medical proxy. If you are unable to make your own medical decisions, give the power to make medical decisions for you to someone you trust.

7. Final details. Specify preferences about your funeral, and leave a list of all your accounts, assets, loans, important legal documents and advisors delegated to carry out your final instructions. Include how you want certain personal possessions and family heirlooms treated. If you have social media accounts, you can let someone know what to do, or there are apps that write or make recordings of final thoughts for loved ones.

A financial lifeboat drill is a pithy concept, belying its seriousness, and it requires answering hard questions about your personal financial, tax, and family situation. It would be a privilege to help.


This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.


Email this article to a friend


Index
Hiddenomics™ Challenge: Find The Leading Economic Indicators
20-Second Year-End Tax Planning Quiz For Pre-Retirees
Last Chance In 2019 For Pre-Retired Professionals & Biz Owners
The Fed Just Cut Rates Again; What's It Mean To You?
Fed Actions Are Driving Markets
Navigating Required Minimum Distributions
Four Retirement Income Withdrawal Methods
Education Tax Credits Primer
Two Overlooked Surprises Of 2019 To Track In 2020
How Negative Yields In Europe Could Drive Stocks Higher
Will Negative Rates Abroad Boost U.S. Stocks?
Tax Law Changes Delayed But Not Dead
About The Weakness In Manufacturing
Is The Inverted Yield Curve The Financial Fakeout Of 2019?
Retirement Income Alert: Do You Own A $1 Million Plus IRA In A High Income-Tax State?

This article was written by a professional financial journalist for Steigerwald, Gordon & Koch Inc. and is not intended as legal or investment advice.

©2019 Advisor Products Inc. All Rights Reserved.