The benefits of preparing for the unexpected are wide ranging. Avoiding delay, saving money, and earlier care in a health crisis are just a few. In Part 1 of this series, we talked about important first steps to prepare for the unexpected. These steps included making lists of important information such as your bank accounts, investment and retirement accounts, insurance policies, real estate and other assets. Also, you were encouraged to compile a list of all of your electronic login credentials with the corresponding password. Our electronic footprint and widespread use of electronic media, accounts, and storage (our photos in the cloud for example) makes it necessary for us to keep our account login credentials handy for our use and for use by those who may need to help us one day.
Now What? You compiled all the information. What do you do next? In this, Part 2 of the series, let’s cover what you should do after gathering the information.
Keep the information current and updated. You spent valuable time locating, sorting, and compiling the information. Make sure your efforts pay off. Keep the information handy, easily accessible, and up to date. Otherwise, your efforts could end up wasted if the information can’t be found when needed or if it isn’t updated regularly. None of us want to waste our effort. You should check the accuracy of the information every six (6) months or sooner if you get a new electronic account or if your login ID or password changes for any account.
Build Your Professional Advisor Team and Use It. Most people rely on trusted professionals to guide them. Each advisor plays a vital role. And just like other teams that have players with unique skill sets, the members of this team have unique skill sets that serve an important purpose. Leaving a member out of this team could leave you unprepared. If you don’t have a full team, build it. It’s easy. It only takes a call, email, or message. And if you aren’t sure who should be on your team, get suggestions from the other advisors you use.
Financial Advisor, Insurance Agent, CPA, And Estate Planning/Elder Law Attorney. This is your team, and they should work together for you. We each have unique skills and experience, and we use these skills and experience to help you and those who matter to you. When you talk to your team members, tell each one you want them working together.
Preparing for the unexpected in your life justifies spending a little time with these professionals who see the unexpected every day. Your financial advisor, insurance agent, CPA, and estate planning/elder law attorney have seen unexpected and surprising life experiences in their clients and friends and have learned from them. We use that learning to better advise you so that you can avoid the problems others have faced so that you can take advantage of opportunities others have missed. Preparing ahead and being proactive about your future is time, effort, and money well spent. It’s the kind of investment that pays off for a lifetime.
Inform Your Spouse or Power of Attorney. If you are married, you and your spouse may have worked together in gathering all of this information. That’s good. It’s easy to forget in our busy life to tell our spouse something they should know, such as details about retirement options, beneficiary designations, and insurance elections that we may have available. Gathering the information together can help bridge the gap and make sure each of you are aware of your property, accounts, insurance, and retirement benefits. Even if you didn’t gather the information together, you should tell your spouse how to find the information if you intend your spouse to use it one day. If you aren’t married or if you don’t intend for your spouse to access the information, make sure your Attorney-in-Fact (that is the person you named as your agent in your Durable Power of Attorney) can access it. They may need it to help you.
Make Sure You Can Answer These Questions. There are several questions that you should be able to answer. They help determine if you are well prepared for the unexpected. If you can’t answer these questions or if you aren’t certain of the answer, contact your team and get to work. It’s not OK to simply say “some of these questions don’t apply to me because I’m too old or because I’m young and I have plenty of time to worry about it later.” These questions are too important to ignore. Here are a few of them.
1. How are you going to pay for nursing home care? Statistics show that at least 70% of adults will need nursing home care. Nursing home care costs approximately $7,000 per month in our region, and the cost is increasing rapidly. You could use all of your savings and hard-earned assets. That doesn’t sound good to me, and it probably doesn’t sound good to you either. There are plenty of other options. The other options may not be available if you don’t plan ahead.
2. Who is going to assist you and make decisions for you if you become incapacitated? You need a capable, trustworthy person who will take care of your financial and health care needs.
3. Has your estate planning, including your Power of Attorney, been updated to comply with changes in the law and with advances in technology. For example, your Attorney-in-Fact should have authority to access the electronic accounts and memberships you’ve created. If that authority isn’t specifically stated in your Power of Attorney, your Power of Attorney should be updated.
4. Are you taking all of the tax deductions and income exclusions that are available to you? The tax code is complex, and its complexity continues to grow.
5. At what age will you retire and what will your retirement income be when you retire? These questions can be answered even if you are many years from retirement. Helpful tools exist to calculate these figures and to forecast important trends. And this isn’t only for people who are near retirement. If you are young, answering these questions will help you boost your income later and, perhaps, put you on the right track for higher income soon.
6. Do you have the insurance coverage that you need? Insurance is often overlooked, but it is an important part of preparing for the unexpected. The amount and type of health insurance, Medicare supplemental health policies, life insurance, long-term care insurance, or home and automobile coverage that we need varies from person to person and with our stage in life. Reviewing this regularly with your agent and professional team is important. You want the right coverage, not too much and not too little. Be proactive in managing your insurance coverage.
Planning ahead and preparing for the unexpected is time well spent. We never regret planning ahead. But we regret when we don’t. Time is available. Take action now. Don’t wait for the unexpected to happen. Contact us for help.