Many folks judge the health of their financial plan based on how the markets and their investment accounts are performing. But a Life-Centered Financial Plan takes a much more holistic approach to your financial well-being - including covering some important "What If?" scenarios that you could be overlooking.
The next time you meet with your financial advisor, review how your plan handles these three important areas:
1. Insurance
You've probably heard the joke that no one likes paying for insurance until they need it. But as your wealth and assets grow, the more important it becomes to have more than one safety net.
In addition to health insurance, homeowners insurance, and auto insurance, consider adding these additional protections:
Life Insurance: Spouses and parents should talk through the pros and cons of various types of coverage to safeguard their families.
Disability Insurance: Your ability to work and earn a living is one of your most valuable assets, especially if you're self-employed. Disability insurance can help replace some of the income that you would lose if you were sick or injured for a significant period of time.
Umbrella Insurance: An extra layer of liability protection that kicks in when you've hit the limits of your other policies. For example, if you were liable for damages in a car accident that exceeded your auto coverage, an umbrella policy could help cover the difference or protect your other assets from seizure.
Flood Insurance: Homeowners insurance typically covers damage from wind -- including tornadoes -- but not from flooding. Even if you don't live in a high-risk flood zone, changing weather patterns and the risks of extreme weather might make flood coverage worthwhile.
2. Estate Planning
Much like a financial plan is about more than market returns, an estate plan is about more than who gets what.
Which is why an estate plan isn't just for the very wealthy. At the very least, every person needs:
Last Will and Testament: Your last wishes and how you want your estate to be distributed to your heirs and any other beneficiaries.
Power of Attorney: The person you name in this document will act on your behalf if you become incapacitated or unable to make decisions while you are still alive.
Healthcare Directive: Explain how you want to be cared for medically in the event that you become incapacitated.
Living Will: Designate someone to be in charge of making important medical choices for you if you are incapacitated or unable to make decisions.
Additionally, you may want to include:
Access to digital assets, including account passwords and backups of personal digital media.
A legacy letter explaining why you made certain decisions about your legacy plan and passing along memories and life lessons that are important to you.
3. Goals and Life Transitions Before Retirement
Planning for your future shouldn’t come at the expense of enjoying life in the moment.
Life-Centered Financial Planning aims to provide for your needs and goals at every stage of your life, not just when you've retired.
So, think about the next five years. Ask yourself:
What do I want to accomplish? Personally? Professionally? Financially?
What am I doing every day, week, month, and year to move myself closer to those goals
What transitions can I see on my $Lifeline?
What transitions should I be anticipating?
Are there vulnerabilities in my plan that I should work with my advisor to shore up?
We specialize in helping folks answer these kinds of complicated questions and identify financial risks they may be overlooking. Schedule an appointment with one of our advisors and discuss how Life-Centered Financial Planning can point you beyond the markets and prep for the best life possible with the assets you have.
