Is Your Financial Plan Up To Date?

I was having a cup of tea with Lady Pilgrim a few days ago. We were going over our financial plan when suddenly a bolt of lightning hit me like the Mayflower coming out of the fog onto Plymouth Rock.

A financial plan actually has two distinct elements. I never really thought about it before, but the distinction is critical. The first part, the one people spend most of their time on, is the part that involves how they are going to have enough money to retire. The second, and far more important part, is really a survivorship plan.

What happens if one or both of the bread earners and/or financial managers die prematurely? This is the part that people spend five minutes on. Most folks think they can buy cheap term life insurance to solve the problem. Well it helps, but it doesn’t solve the problem.

One issue is having the money (either through investments or insurance or a combination of the two). That’s easy. The hard part is knowing what to do if the financial manager is the one who gets his ticket punched early.

Can your survivor make good decisions on his own about investing, insurance, budgeting, paying bills, etc.? The list goes on and on. If the survivor is the person who never wrote a check before, how can they be thrust into the position of financial manager of your family?

Have you addressed both these issues? Do you even have a plan? If not…why not? Do you think this issue is part of a financial plan?

While you’re considering that…