Financial Lessons You Can Learn From 2020

There is an old proverb that goes “After the ship is sunk, everyone knows how it could have been saved.” Hindsight can be a powerful tool in applying lessons to make sure we don’t make the same mistakes over and over again. I would venture to say many of us lay people await what lessons you in the medical community have learned from this pandemic and the way it was handled. 

The lesson that stood out to me is the role risk plays in both our professions (financial and medical). Risk was brought to the forefront this year. People were uncertain about a lot of issues; whether it was job loss, market volatility, the prospect of our favorite restaurant closing its doors forever, or just stepping out to go shopping and not know how sick you could get. It begs the question—what do we do about risk and how do we handle it.

I’m sure you have read many studies in your professional career that talk about relative risk and how to make the best decisions as it relates to patient outcomes.  In my profession we look at risk as well. We study the risk of a given portfolio’s construction and its impact on return or the risk of someone dying. or becoming ill over a prolonged period and the impact on income. Regardless of our profession one thing these studies have in common is their study of relative risk…the risk of an outcome for one group compared to another.

What this year taught me is that risk to any one individual is binary. You either transferred that risk to someone else or you didn’t. You either become ill before you retire, or you don’t. You either got laid off this year or you didn’t. We, as individuals, don’t get to deal in relative risk. We have to be prepared that life may deal us something unexpected. With proper planning, however, those unexpected issues can be handled.

So here is a short list of the lessons I learned from this past year I have imparted to my clients to give them the most control possible when life seems like it isn’t cooperating.

EMERGENCIES CAN BE MITIGATED

Yes, financial emergencies can happen when we least expect them — to us as individuals or to the entire world, but the financially confident among us know that with the right emergency planning we can expect the unexpected. Having the right protections in place, like a solid emergency fund that provides access to funds when events outside of our control happens makes a big difference. In a year marked by illness, income protection can provide the safety we need to heal, without the worry of not being able to handle the bills. Finally knowing that those we love are protected through life insurance provides the reassurance that our love ones will be provided for if we are no longer here.

GUARANTEED INCOME

Among other things many Americans learned in 2020, we found that previously steady passive income streams — like rental properties — are less reliable than was assumed. If you are close to retirement (or retired) what would March have felt like. Were you worried for your portfolio—do you require the cooperation of the market to achieve your goals? For Americans in need of true, guaranteed income sources, like retirees, an annuity or whole life insurance could be a great consideration for any portfolio. 

LONG-TERM JOB LOSS

Unexpected job loss is always an emergency, but what if you were unable to go back to work for months or years? After 2020, this thought experiment feels all too real for many. This year saw entire industries shut down indefinitely, stranding millions of Americans jobless. One insurer reported that one third of all short-term disability claims filed in April 2020 were related to COVID-19.1 In addition, many survivors of COVID-19 have reported long-term medical challenges that make returning to work impossible. Have you created the necessary nest egg that provides proper access if you were laid off for longer than expected.

INCOME PROTECTION CAN HELP

Income protection through disability insurance can help make sure that you and your loved ones avoid the worst effects of unexpected job loss due to a disability. With income protection in place, you can still earn money while unemployed due to sickness or a disability, even in the event of industry shut down or long-term illness.

HEALTH SAVINGS ACCOUNTS

Speaking of long-term illness, COVID “long haulers” are individuals who have experienced health problems long after recovering from their initial bout of the virus.2 For many Americans experiencing long-term health problems, a health savings account (HSA) can help safeguard against high medical costs. As a result of the CARES act, passed in response to COVID-19, HSAs can now also be used to purchase over-the-counter medication and menstrual care products.3

PROTECTION FIRST

As we move into a new year and see, perhaps, the end of the COVID-19 pandemic in the distance, it’s important to look back and reflect. Millions of Americans have experienced — or are still experiencing — the effects of a financial emergency. With this knowledge still fresh in our collective consciousness, the value of protection-first planning is more apparent than ever.

As a first step, try taking a written inventory of your layers of financial protection. Then, take your list to a financial professional for evaluation and suggestions.

Brought to you by The Guardian Network ? 2021. The Guardian Life Insurance Company of America?, New York, NY. 

Jason S. Lurie, MBA

Managing Director

P: 518-867-3210 Ext: 109| C: 518-461-8373| [email protected]

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Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9 Fl., New York, NY 10017, 212-541-8800. Securities products/services and advisory services offered through PAS, a registered broker/dealer and investment adviser. Financial Representative, The Guardian Life Insurance Company of America? (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Wealth Advisory Group LLC is not an affiliate or subsidiary of PAS or Guardian. Wealth Advisory Group is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. PAS is a member FINRA, SIPC. 

Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9 Fl., New York, NY 10017, 212-541-8800. Securities products and advisory services offered through PAS, member FINRA, SIPC. Financial Representative, The Guardian Life Insurance Company of America (Guardian), New York, NY. PAS is a wholly owned subsidiary of Guardian. Wealth Advisory Group LLC is not an affiliate or subsidiary of PAS or Guardian. Wealth Advisory Group LLC is not registered in any state or with the U.S. Securities and Exchange Commission as a Registered Investment Advisor. 2021-118473 Exp. 3/23 

1 Unum Disability Guide 2020, unum.com, accessed January 2021.

2 Long haulers: Why some people experience long-term coronavirus symptoms, health,ucdavis.edu, December 8, 2020, accessed January 2021.

3 IRS outlines changes to health care spending available under CARES Act, IRS.gov, June 17, 2020, accessed January 2021.

DISCLAIMERS:

Annuity and Whole life guarantees are backed exclusively by the strength and claims-paying ability of the issuing insurance company. While the primary purpose of life insurance is death benefit protection, it is important to understand the advantages that cash value accumulation can provide to clients, including supplemental income during retirement.