Things that Frighten Me… as an Advisor
I hate snakes. My wife hates spiders. We make a great team. I can save her and she can torture me. Beth is extremely scared of spiders, even small ones. She has a unique set of screams corresponding to the spider size that I have learned to decipher over almost 15 years of marriage. A few weeks ago, Beth caught a snake in the woods behind our house and called me at work to tell me we had a new “family pet”. Let me be clear, that “pet”, upon my arrival home from work, was quickly released back to the wild (by her).
Over the years, readers of Stewardship Cents have learned that I love the Fall season and also occasionally giving others a little scare around Halloween time. Somehow my kids now, all throughout the year, regularly try to scare each other and their parents. Who taught them that?! There are a few things that scare me besides my 7 year old jumping out of his closet.
What Frightens me as a Financial Planner and Should Frighten You as Well
Not enough Life Insurance or none at all
This is a basic planning strategy but often lacking for most families. Life insurance is affordable for most people and provides protection for your loved ones. For many families, having $1 Million dollars of death benefit still isn't enough. Really! I can explain why.
Unsure where the Money Went
Whether you make $35,000 a year or $35 Million, everyone has to have a budget. You have to know where your money went (expenses) and why the money was spent on that item(s). This information enables you to be a good steward of the resources you have and allows you to live within your means.
Lack of a Good Financial Plan
So, where are you going financially? A simple question, but often unknown by most families... that is SCARY. Is the direction you are headed where you want to go and will you be happily or sadly surprised when you arrive? Ask yourself these questions; what do you truly value and what is important to you today and what will be important to you tomorrow? This is why a financial plan is necessary for everyone.
Avoiding Stocks
The media has done a good job of making people scared of stocks due to the volatility seen in recent years. However, the truth is...volatility is a normal part of the market and other major investment categories like metals (gold/silver), bonds and currencies- can often be even more volatile than stocks. Stocks over longer time-frames of 7+ years typically provide good returns and help maintain your purchasing power. In my opinion, everyone, even retirees, need a healthy portion invested in a diversified portfolio of solid, large company stocks. Good financial planning helps highlight this need over a lifetime.
An Estate Plan that only consists of Dying someday
If your only plans for your estate is that you will die, well it may be a little short-sighted. Who do you want to inherit your money and assets? Do you have specific wishes for your loved ones and charitable organizations to follow? Have you ever heard of probate court? You want to avoid it.
No Personal Disability Policy
Disability is more common than most people think, especially short term issues. Often employers provide some coverage, typically 60% of salary but it is almost always never enough. Sixty percent sounds decent but after taxes it is a far cry from your family's regular income. You need a supplemental policy to fill this gap of lost income.
Expectation that Social Security will be your Retirement
Social Security is currently solvent and a major portion of most retirees' income. However, 15 or 20 years from now social security will likely look rather different for new enrollees. You can't count on it to be there and it will not provide a comfortable retirement. You have to save for yourself and whatever benefit you may receive from Social Security can be the "icing on the cake."
Here is the Truth
The truth is that each of these frightening scenarios can easily be resolved through discussion and proper planning. I understand that it can be hard to address these topics; sometimes it is hard to find time, gain agreement from your spouse, admit that these issues exist or simply it can be difficult to determine who you can trust. It is my joy to assist clients and new people I meet with these issues and many more planning strategies. With over 35 years in the business, our firm is well-positioned to assist you or someone you know.
So don't be frightened any longer, let's face these fears together. No snakes though.
Luke Fields, CFP®
READ more Stewardship Cents here...
Any opinions are those of Luke Fields and not necessarily those of RJFS or Raymond James. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance may not be indicative of future results.