Here are a five of the “what if’s” that financial advisors should be covering with their clients to create the most beneficial plan for the future. These items are those major "life changing" events that most people go through, but few plan for in advance.
According to The Knot, the national average for wedding costs hit $35,329 in 2016. If you have a child in their 20s or early 30s, its entirely possible that as they get ready to walk down the aisle, they will be looking to their parents for funds. With many weddings costing more than a Porche, without proper planning, that's a huge chunk of retirement (or mid-life crisis) money that will be gone. Although we all hope that a wedding is a once in a lifetime event, and that of course the cost is worth it, without proper planning, a huge debt that takes years to pay for could accumulate.
2. The New Baby
The wedding is over, and maybe a couple years have passed - and now we're heading into the time where many are starting a family. Whether it's the high cost of adoption, or the medical bills associated with having a baby, many people are not prepared for the immediate costs associated with having children. Being sure that there is a comfortable nest egg or other plan in place will help with soaring costs. This is especially true in this situation, as it is often the case where one (or sometimes both) parents are staying at home to take care of the new baby. With decreased income and increased bills, planning financially for a new baby should be a top priority.
3. Medical Bills
Whether it's little Jimmy falling out of a tree after his sister dared him to climb one branch higher, or it's your client's broken leg after tripping on their child's skateboard, unforseen medical bills are a HUGE burden on many families. Proper planning, insurance, and even supplemental health benefits can all help to ensure that your client's savings are not depleted in time of emergency.
4. New Jobs...Or Losing Old Ones
Sometimes a new job requires your client to move, which can vastly affect their finances. Between the cost of the move, the economy of the new area, and potential pay cuts, it's possible to quickly burn through any savings your client may have just to start their new career. Even those clients who may be leaving one job and starting another locally will need cash on hand to continue paying for bills, rent or mortgages, and daily living expenses while they transition. If your client happens to lose their job and may need time to find a new one with equal or better pay, having this savings becomes even more important. Long-term planning of this nature can also help in the instances where they may not find a job that had the same pay or benefits, and need to supplement their new income for a time.
5. Losing a Loved One
Between the cost of a funeral and burial services, any potential medical bills, plus the general loss of income a family can face in the event of a death, a death can be a huge loss for a family in a financal sense as well. Often younger clients may still believe they’re invincible, but even for these people, it is important to walk through the hypotheticals to be sure that all bases are covered to the best of their abilities.
These 5 cases are not all of the major events that life can throw at your clients, of course, but these are often overlooked during times of planning. It's important that when these and other events happen - good or bad - that your clients have the resources available to continue living their lives as normal. Sitting down to cover information such as income, expenses, health, and other important details will help to serve them in ways that they, perhaps, had not even known they needed.