One of my favorite sayings is “Proper Prior Planning Prevents Poor Performance.” Proper planning can help you take the stress out of some of the biggest, unplanned events that you may see in your lifetime.
According to an AARP study dated December 28, 2019, “In total, 56 percent of workers over the age of 50 in long-term, full-time positions lost their jobs involuntarily. Among the rest, 16 percent were still working, 19 percent retired voluntarily, and 9 percent left their jobs for personal conditions such as health or caregiving.” Those are some scary numbers. I often work with clients to find their “work is optional” date. This isn’t necessarily their retirement date, but rather the date that they can choose to go to work instead of have to go to work. When you know this date and the unexpected hits, it’s much easier. I had clients who came into my office and reviewed their financial plan with me. At that time, we determined that work was optional. Two weeks later, their company came down with layoffs and buyouts. Needless to say, they already had the data that they needed to make their decisions. Can you imagine how much stress was eliminated by knowing where they stood? (Source: https://www.aarp.org/work/working-at-50-plus/info-2018/forced-retirement.html)
Another area you need to plan for is if you become disabled. A good financial plan will illustrate the consequences of a disability on your future. It will help you visualize where the cash flow that is needed will come from, it will address the tax consequences of the income and whether or not you should pay disability premiums with before tax or after-tax dollars. I recently had a client come into the office who is getting ready to go out on disability from her employer. Because we have a financial plan, we were able to review what that would look like. As with anyone with major health issues, they already have a lot of stressors. Money doesn’t need to be added to the list.
Unexpected death can have a major impact on your family’s finances. Emotionally, it’s having the rug pulled out from underneath you. You could lose your spouse’s employment income and future Social Security. Having a plan lets you know what those numbers look like in advance. I will never forget a call that I received at home on a Sunday morning from a client whose husband had died the previous night. He was not that old. Not a great time for her. However, when she asked the question “Am I going to be Okay” I was able to answer that she would be fine. She was fine because we had planned for the worst.
If you plan for the worst and hope for the best, you increase your peace of mind and may reduce the stress on your family during very difficult times.