Beware of Personal Financial Hazards Part 1: Lost Family Income from the Unexpected Death of a Provider

#incomeprotection #findyourcompass #financialhazards #income #financialstrategies

Can Your Family Make It Without Your Earnings?

Family Income

The way of life and future financial goals of most individuals and families depends on the continuation of their household income for many years. Without continued income, not only would their lives change today, but the security and comfort of their future could be drastically altered.

If something terrible or unexpected happened to you would your spouse or children have to change their lifestyle? Would they still be able to make mortgage, car loan, or other debt payments? How long could savings and taxable retirement assets replace income before your family would need to begin selling your assets or your home? What assets would you want them to sell first (car, home, retirement accounts, etc.)??

Many families and individuals have not considered how quickly their financial comfort and security would change if a major source of family income was lost. How long would your family be able to maintain financial stability and financial goals (like future retirement) if your income disappeared unexpectedly?

Let’s look at a hypothetical example

If something happened to you, how long would your family have before their way of life or future retirement were in jeopardy??

James and Darla are married with two children. James is a technology engineer for a rapidly growing tech company.

James earns $250,000/year (base + bonus). James and Darla have $125,000 across multiple retirement accounts with $100,000 in term life insurance coverage and $15,000 in a checking account. They have $80,000 of equity in a $700,000 home.

If there was a sudden and permanent loss of James’ income, due to his unexpected death, this family could have less than 8 months before consuming all of their savings and retirement assets and possibly being forced to sell their home!

Let's look at the numbers

If James died unexpectedly, let’s look at how long the family could make it before their retirement assets, savings, and home would be at risk. In other words, without adequate income protection, if something happened to you, then liquid assets, your home, and even your retirement accounts could be at risk of loss!

Income Needs: $250,000 (James’ prior annual income) -30% (assume expenses are less than income) $175,000 (income needed by family) ÷12 (months in a year) $14,583 (monthly income needed by family)

Available Assets: $125,000 (retirement account assets) -25% (assumed taxes on withdrawals) $93,750 (after-tax retirement account assets) +$115,000 (term insurance and checking) = $208,750 (total available assets) / $14,583 income needed for family

14 months, (1.2 yrs) before they may need to sell the house, move, and face running out of money.

In other words, without adequate income protection, if something happened to you, then liquid assets, your home, and even your retirement accounts could be at risk of loss.

You Have Options

What if you could give your family income security and relieve their need to consume existing resources? What if you could erase home debt and help ensure family well-being in the event of your death?

What if you could set up a strategy to provide a large amount of cash for your family income tax free? What if you could use existing savings to fund this arrangement and still benefit from long-term cash performance? What if you could eventually get all of your dollars back, plus added growth? What if there was a way to create the dollars needed in the future for pennies on the dollar today?

Let’s Talk

There are several powerful strategies that can help you accomplish these, and many other, personal financial goals. Let’s sit down and talk and you can decide if any of these strategies might be of interest to you.

New York Life Insurance Company, its agents and employees may not provide legal, tax or accounting advice. Consult your own professional advisors before implementing any plan-ning strategies. ? 2018 New York Life Insurance Company. All rights reserved. SMRU 1778962 (exp. 06.30.2022)

As always, if this resonated with you, please share it with other business owners and use the hashtag #findyourcompass.

This is a topic I am very passionate about - it is about saving families and businesses and helping our clients gain their compass. Let me help you find yours!

All the best,

-Roger