Planning is valuable for many reasons and helps to ‘normalize’ things when you find yourself in the middle of an unexpected life event. A death, a critical illness, job loss, new family member, an inheritance, divorce, or a catastrophic event that can cause a major financial detour. How you plan will help determine how you survive and normalize after these events.
Planning can be as simple as making sure you have the right insurance coverage, from personal insurance such as medical and critical illness insurance, property insurance and an emergency fund. All insurance is to offset risk, cover expenses, and to protect other assets such as retirement accounts that you’ve accumulated. An additional item is to have a will in case something happens to you so that your loved ones carry out your wishes.
Some people consider financial planning to include risks that are health related. If you or a family member had a major medical event or condition, would you have the financial assets to cover all the expenses and cover your loss of income related to the medical event? How would it impact your portfolio and ability to accumulate assets? Which assets would you choose to liquidate first?
With life’s always changing events, planning for the unexpected when experiencing a significant life event is essential. It is possible to run scenarios within a financial plan to see outcomes of specific circumstances and how they may impact you. If you get detoured by an event or wrong investment decision, planning can help you to recover quickly to a ‘new normal.’ Life can be messy and what you do now will make the difference in what may happen later. No one can predict the future, but it helps to prepare ourselves now as much as we can.
If you would like to visit regarding planning for potential risks and how it may impact your portfolio, please contact our office.