A good friend of mine recently participated in the New York marathon. During our discussion, it occurred to me that financial planning is much like a marathon race. Fulfilling financial goals tends to be a marathon rather than a sprint.
As a financial advisor, I’m much like a trainer helping a runner
prepare for a marathon. The goal may be funding a college education for a
child or grandchild, or building a sufficient retirement nest egg. When
you’re a seasoned veteran like me, it’s personally rewarding to see a
couple financially comfortable in retirement. Especially when they thank
me because they couldn’t have done it without my guidance.
I’m not patting myself on the back, I just feel fortunate to have a
career in something I’m passionate about. And the reality is that not
everyone is going to achieve their goals, often because something goes
horribly wrong during the marathon.
That’s why every plan should have contingencies to be prepared for the unexpected curve balls that come in life.
You shouldn’t go on a boat without life jackets or drive a car without
seat belts, but too many people set and work toward their financial
goals without the proper safety precautions. Proper planning allows you
to adjust your stated goals and objectives when obstacles arise.
Death, disability and the need for long-term care are examples. Nobody
likes to talk about these issues, but they need to be discussed and
incorporated into the planning process.
Many people believe that life insurance is only for those with young
children. Well, parents with young children do need life insurance. But
college educations shouldn’t be shelved because mom or dad died
unexpectedly. I could make a mathematical argument that anyone with a
child should have a minimum of $500,000 of life insurance protection.
But life insurance should not be just for those with young children.
It may surprise some, but people over 50 purchase a significant amount
of life insurance. One overlooked benefit is instant liquidity, which
can prevent a family from an untimely sale of an asset because of death.
like being forced to sell real estate at below market values.
Today there are even life policies that can offer double duty. By that I
mean using the death benefit as a living benefit. For instance, if you
needed long-term care, you could use the life policy death benefit value
to help fund the astronomical cost. You don’t have to meet St. Peter
to collect on your life insurance.
While you’re employed, disability income protection is also important.
Your largest investment is likely yourself and your education. If you
couldn’t work, how would the bills be paid? For many, lack of
disability coverage is a gaping hole in their financial planning.
Life is a marathon in which we’d all love to cross the finish line in
relatively good health. But life doesn’t always work that way. Some
won’t cross the finish line and others will need assistance. But every
one of us needs to incorporate the unthinkable into their financial
It is easy to overlook, neglect and rationalize why life insurance
isn’t needed. But nobody can predict what roadblocks they’re going to
encounter along the marathon of life. If you want to be prepared, you
have to plan for them.