It is no understatement that life is full of surprises. Though these unexpected events can often be welcome and joyful, there are also surprises that are less pleasant—and if these surprises derail your financial goals, they can even be catastrophic for your future.
While there is no way to know for certain what life will throw your way, planning for potential risk scenarios helps tremendously with your financial confidence. Unexpected life changes can rarely be predicted, but with careful preparation, you can be certain your financial foundation will hold strong regardless of what is on the horizon.
The 5 Main Financial Risks to Plan For
Humans have been proven to be adverse to thinking about their own mortality, and though this topic can be unpleasant, it is one that must be addressed. For those that are left behind, the financial impact of losing a loved one can be devastating—and without proper life insurance, not only can a person’s income be lost, but their medical and funeral expenses can often become a burden as well. Being sure you have a policy in place that will help take care of your loved ones financially after you die can give you and your family solid financial confidence.
Though there is always a risk when making investments, for those nearing retirement age, market volatility can be a major concern. However, a smart financial strategy can set you up for success even when the markets become seemingly unpredictable. Any financial strategy should include volatility as a planning point, so you can be certain your investments will serve you well both in the present and in the years to come.
Loss of Health
Most people who have begun the financial planning process have clear goals for retirement that involve working until a certain age, saving a specific amount, and then leaving the workforce...but what if an illness or injury inhibits your ability to work? The chances of becoming disabled before retirement age is 1 in 5 for adults over 45, and for those without disability coverage, the resulting loss of income could be absolutely devastating to a retirement plan. Adding on excessive medical bills on top of that can make it even more impossible to stay afloat, so planning for loss of health is an important element for any financial roadmap.
For those that have fixed incomes (such as those entering into retirement), inflation can be a major concern. If the cost of living rises and a person’s wages do not rise to match, there are difficult decisions to be made to make ends meet. Fortunately, this is something you can plan for in the present—your financial plan should include strategies that will help keep you covered, even if inflation becomes a factor during your lifetime.
Though taxes are certainly a part of life, minimizing your tax bill can be a vital aspect of ensuring your money can stretch further in retirement. Understanding how your investments and retirement income will impact your tax bracket is extremely important—a high balance can become negligible if it is taxed at an excessive rate. As you work to plan for your financial future, be sure that taxes are being taken into account so you can keep your tax bill as low as possible every April.
If you need help planning for any of the 5 risks above, we would love to be of assistance. Contact us today to learn how our comprehensive financial planning can help you stave off risk and build a financial foundation you can be proud of.
Steven Huskey and Huskey Financial Group are not licensed tax advisors and any tax information listed above should be used as opinion. Guardian, its subsidiaries, agents and employees do not provide tax, legal, or accounting advice. Consult your tax, legal, or
accounting professional regarding your individual situation.