In my practice as a financial advisor, I adopt the PS&G Model, an acronym for protection, savings and growth. Many people approach their financial lives with a “growth first” mindset, which can be a mistake. Depending on your budget and circumstances, PS&G can be followed step by step or addressed simultaneously.
I often ask people what they think is the largest asset most individuals have. Take a moment to answer that question before reading on.
Did you say your home? That’s the most common response, and it’s logical. However, the reality is that your single largest asset is your ability to earn a living. If you are already retired, that earning power was your largest asset—and it’s what allowed you to reach where you are today.
Protect Your Largest Asset: Disability
Nobody likes to think about the possibility of something going wrong in their life. It’s uncomfortable and frightening, but ignoring the possibility can be costly for you and your family.
Imagine a scenario where you are injured and unable to work. You will still need a roof over your head and may require additional medical care, devices or accommodations. These added expenses, combined with a loss of income, can quickly lead to financial hardship.
While some people have disability insurance through their employer, it often covers only about 60% of income and may be limited in duration. This is where long-term disability insurance can play a critical role.
Life Insurance
Losing someone you love is incredibly painful—you lose the ability to share time and experiences with them. Even more tragic is leaving loved ones without the financial resources they need when they are relying on you.
Several years ago, I spoke with a teacher whose husband, just 30 years old, was diagnosed with a brain tumor. In less than six months, she lost her husband. She and her children were forced to sell their home and move in with her parents because they could no longer afford the mortgage on her teacher’s salary alone.
What stayed with her the most was the regret her husband felt in his final months. She shared how he would cry and apologize for not having life insurance in place. For less than $50 per month while he was healthy, he likely could have secured close to $1 million in coverage—but he didn’t think he needed it.
No one expects to die at 30, but it happens.
You wouldn’t drive a car or live in a house without insurance—so why risk your life when so much depends on it?
Long-Term Care
Federal estimates suggest that approximately 70% of people turning age 65 will require some form of long-term care during their lifetime. This care may take the form of in-home assistance, assisted living or nursing home care.
Many people assume this type of care is covered by Medicare, but it is not. Medicaid is the primary safety net, and it is generally available only to those with significant financial need. In many cases, one spouse requires care, leaving the surviving spouse with substantial costs and limited resources after their partner passes.
As a result, many families turn to unpaid caregiving by loved ones—often with regret. I recall an elderly family member who repeatedly apologized to their children for being “a burden.” I often ask clients to consider this question: Do you want your children to be supervisors—or grunt workers?
Know Your Options
Life is full of unknowns, and it’s essential to protect your family from whatever may come your way. The cost of avoiding uncomfortable conversations today is often far greater discomfort for the people you love tomorrow.
If you would like help determining the best course of action for your situation, I’d be happy to walk through different scenarios and help you protect what matters most.
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Disclaimer: This article is for informational purposes only and is not tax, legal or financial advice. Everyone’s situation is different, so consult a financial advisor.
If you would like to connect with me, please call 615-619-6919 or email me at smoran@redbarnfinancial.com. You can learn more at redbarnfinancial.com.
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Photo, top, courtesy of Pixabay / Pexels
