Is Your Financial Umbrella in Place?
We all know the phrase, "April showers bring May flowers." Having an umbrella handy is an important consideration at this time of year. Being prepared for weather conditions can teach us a few things – especially if we think about “umbrellas” that can help us protect our financial goals.
Consider these key areas:
- Your vulnerability to emergencies – It’s a good idea to maintain an emergency fund containing three to six months’ worth of living expenses. Without such a fund, you may need to dip into your long-term savings to pay for unexpected, and unexpectedly large, expenses such as a new furnace or new roof. You’ll want to keep your emergency fund in a liquid, low-risk account.
- Your family’s financial situation – If you passed away unexpectedly, how would your loved ones be affected? Would your family be able to stay in your house? Could your children eventually go to college or university? Would your surviving spouse have enough retirement income to maintain the lifestyle he or she has envisioned? Having adequate life insurance in place can help ensure that your goals don’t get derailed in the event of an untimely death.
- Your current income — If a serious illness or injury keeps you out of work, even for a little while, the loss of income could disrupt your family’s ability to pay its bills, leading to potentially big problems down the road. Your employer may offer some type of disability insurance as an employee benefit, however, the coverage may be insufficient to fully support the replacement of your lost income. Having adequate critical illness and disability insurance in place can help ensure that income is replaced in the event of a serious illness or injury.
- Your ability to live independently – As you transition to retirement, you may want to consider the importance of long-term care insurance. No one can predict the future – however, the impact of long term care requirements and associated costs of long term care can be high. Plan to give yourself the choice and flexibility in the event of a long term care need, and protect your retirement assets from erosion, by having adequate long term care insurance in place.
The sun may be shining in your life today, but it’s always wise to be prepared for the proverbial “rainy day.” To help you have your umbrella ready, a Financial Advisor can perform an insurance review to help ensure that you have the right type and amount of insurance in place in the event of an unexpected event.