This world is full of risk. Some risks are worth taking. Others are not.
Also, risk comes in many flavors and variations - physical, emotional, relational, professional, or financial.
In the financial world, we hear the talking heads associate “risk” with “return”. In essence, if we are 100% risk averse, we will experience very little opportunity for growth. However, we might be willing to take on large amounts of risk with the hope of large upside potential.
Well, not everything is black and white in this world, and people do not always act rationally.
Distilled down to everyday language…each of us has different goals, preferences, and fears.
Please understand, we’re not here to tell you or your employees what specific risks you should mitigate or what insurance policies you should own, but rather, we want you and your people to be well-informed, know the right questions to ask, and be able to put a plan in place that is tailored for you and your families.
Regarding financial risk, there are 4 critical questions that you and your employees should all have answered:
- What if you get sued? - You’re right to be worried. There are over 100 million cases filed each year in American courts, and there are only 330 million people in the United States. You do the math. In less than 4 years’ time, there are as many court cases filed as there are citizens of the country. Conclusion…”Cover your assets!”
- What if you become sick or hurt? - This is an often-underappreciated topic. Take a moment to think through what next month would look like financially if your paycheck stopped. According to Bankrates Financial Security Index, only 39% of us have savings over $1,000. So, even needing to take just a week or two off without pay could lead to devastating financial consequences.
- What if you die younger than expected? – In our youth, we were invincible and would live forever. Now as adults with families we love and care for, it’s not unusual for us to begin contemplating, “What if I die before I ever get a chance to grow old?” Forgive me for being Mr. Downer here, but over 40,000 Americans died in car crashes last year alone! Add to that the risk of heart attack, stroke, cancer and so on. If you were to die unexpectantly, what would that do to your family financially?
- What if you need long-term care at some point? - The Alliance Health Policy research shows that 58% of men and 79% of women aged 65 and older would need long-term care at some point as they grow older; it’s expensive. According to Genworth, in ten years, the cost of one year of care will cost between $60,000 and $130,000. If we don’t have a plan for this, the assets we worked so hard to save and build will be wiped out, rather than going to your family.
If you want to learn more about how to help you and your employees manage risk, contact us at the Foundation for Financial Wellness.