Meeting the Discomfort of “What if”


In our first article related to Life Cycle planning, we discussed how to plan and prepare for your family goals whether it was getting married, purchasing real estate, or preparing for parenthood. While these are exciting and heartwarming stages of life for most of us, we often overlook the opportunity to consider our contingency plan should relationships dissolve or extra care become required for a loved one. Pondering the “what if” scenarios may elicit some uncomfortable feelings, but ignoring them now may result in harder challenges down the road.

Taking advantage of the calm in life to prepare for potential storms will undoubtedly build your resilience, both individually and as a family. Consider these action items to help equip yourself for the unexpected challenges that may arise along your journey:

Assess Your Coverage

  • Now, you may cringe at the expense of paying for the just-in-case moments, but assessing whether you have proper insurance coverage will save your family financially and emotionally in the long run.
  • In addition to long-term care insurance that covers your needs as you age, you may want to consider additional disability insurance to protect you and/or your spouse’s income while you’re working, should unexpected health issues arise and compromise your financial footing.
  • While no one wants to think of their spouse’s potential death, life insurance is an important tool to help ensure your surviving family members are able to maintain their standard of living.
  • It’s smart to have a financial advisor review your current insurance status and make recommendations based on your current and projected lifestyle needs for you and your family.

Define Life After Divorce

  • When preparing for the possibility of divorce, whether it coincides with a prenuptial agreement or impending litigation, emotions can quickly escalate and cloud both parties’ ability to make rational decisions.  They often fail to realize that it’s best for both parties to move on as peacefully as possible, should their relationship take a turn for the worst.
  • Despite the potential tension, discussing and reviewing how each partner will be financially impacted by a divorce now when the relationship is healthy, can help ensure both partner’s financial rights are considered equitably. Formal legal advice should be considered by both partners to ensure that all aspects of their separation are addressed, including division of assets, alimony agreements, and child support.
  • A CERTIFIED FINANCIAL PLANNER™ professional can also play an instrumental role in the divorce process by helping divorcing couples readdress budgets, make adjustments for previously stated goals, and tackle otherwise unforeseen tax obstacles.  

Build Your Rainy Day Fund

  • In addition to your current budget, work with your financial advisor to devise an emergency savings fund that you can easily access should an unexpected life event occur.
  • The purpose of an emergency fund is to give you financial direction and show you where you can cut or tighten up in your expenses to help during lower income periods. Having this prepared will help reduce stress no matter what interrupts your plans.
  • A rainy day fund or emergency fund containing about 3 to 6 months of living expenses, depending on your income and situation, is a safety net that we typically recommend our clients have in addition to regular savings, investments and retirement accounts.Sit down with your CPA or your financial advisor to help you put together a strategy to build your reserve.

Document it

  • Formalize your decisions properly with the proper legal representation to protect you and your family’s rights during life’s toughest challenges.
  • Establishing an estate plan is a great way to ensure that your family’s financial goals can be met, even after you pass away. An estate plan has several elements including a will, a power of attorney, a living will and a medical power of attorney, and for many people, a trust may also make sense.
  • Addressing whether your own aging parents have also documented their wishes is also important and will help alleviate questions and confusion when the time comes to make lifestyle changes on their behalf.
  • A surprise to many is that some simple legal documents should be considered for their college-bound adult children – mainly a financial and healthcare power of attorney.

Overcoming life’s challenges may be a source of turmoil or satisfaction, but surely facing those challenges blindly and unpreparedly is unnecessary. This is when it becomes much more important that all the advisors in your life, from attorneys, financial advisors, CPAs, insurance agents, and mediators, work together to ensure that your best interest is considered throughout. While it may be difficult to discuss some of life’s big hurdles with your advisors, it is best to seek guidance early on.  

Keep an eye out for our final article in this Your Financial Life Cycle Blog Series. We’ll be delving deeper into your retirement and aging lifestyle changes.

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