Approximately 1.3 million people filed for bankruptcy last year.
Why? Well, one reason is poor risk management.
Many American families neglect to plan for unexpected job loss, illness, injury, or death.
Only 22% have enough savings to cover basic living expenses for longer than 6 months.
Average unemployment period lasts for approximately 7 months.
Only 35% have disability insurance.
Average disability claim is for 31.5 months
95% of disability causes are not work-related.
Only 34% of individuals have wills.
Why does this happen? Well, we under-estimate the risks and over-estimate our abilities to avoid them.
For example
51% of US population are afraid of snakes.
Yet there were only 5 estimated deaths from venomous snake bites that occured last year.
But 94% of the US population are not afraid of riding in motor vehicles.
And there were 32,675 estimated deaths from automobile accidents last year
So we under-estimate our day to day risk because we don’t think it can happen to us.
For example
78% of workers believe the only 1 in 25 people will become disabled.
Actual odds are 1 in 4.
As a result of poor planning, more and more individuals risk financial ruin.
Unpaid medical bills cause over 62% of all US personal bankruptcy filings.
69% of families cited a significant impact to their financial stability after the loss of a spouse.
28% of 25-year old couples will have one spouse pass away before the age of 65.
Emotions and misinformation are at the heart of these behaviors
Avoidance
This problem will go away on its own
Anxiety
I just can’t deal with this
Miscommunication
Talking about it makes it more likely
Illusion of Control
These risks don’t apply to me
Financial Advisors can help!
Like a tutor helps a student to study to ace an exam, a qualified financial advisor can help
you to make sure that you have protected yourself and your family against unforseen events.
Research shows that families working with professional financial advisors...
Are more-likely to have insurance and other protections in place
Feel more ready to meet financial challenges
Make fewer financial decisions based on emotion
Stay on budget and save more
Aren’t financial advisors expensive though?
Actually, the cost is small relative to the benefits you receive. An average family who hires an advisor for
a comprehensive consultation including evaluation of life insurance coverage pays about $720.
Isn’t that worth it?
Let's take a look at two comparable families and their finances.
Family 1
Income
$58,000
Expenses
$54,810
Annual Savings
$3,190
House
$188,900
Net Worth
$77,300
Life Insurance Coverage
$493,000
Family 2
Income
$58,000
Expenses
$54,810
Annual Savings
$3,190
House
$188,900
Net Worth
$77,300
Life Insurance Coverage
$0
One year later
Family 1
(Father dies unexpectedly)
Income
$30,000
Expenses
$43,010
Annual Savings
-$13,010
House
$192,678
Net Worth
$355,283
Family 2
(Father dies unexpectedly)
Income
$30,000
Expenses
$43,010
Annual Savings
-$13,010
House
$192,678
Net Worth
$57,018
Five years later
Family 1
Income
$33,122
Expenses
$45,661
Annual Savings
-$12,539
House
$212,732
Net Worth
$279,015
Family 2
(Forced sale of house to meet spending needs)
Income
$33,122
Expenses
$42,501
Annual Savings
-$9,379
House
$0
Net Worth
$66,283
Seven years later
Family 1
Income
$34,461
Expenses
$46,797
College Support
-$50,000
Annual Savings
-$62,337
House
$221,326
Net Worth
$585,400
Family 2
(Cannot afford to help daughter with college, more reliable on student loans)
Income
$34,461
Expenses
$43,580
College Support
$0
Annual Savings
-$9,120
House
$0
Net Worth
$85,857
Retirement Time
Family 1
(Can retire)
Income
$0
Expenses
$62,771
Annual Savings
-$62,771
House
$342,771
Net Worth
$1,041,442
Family 2
(No retirement on the horizon)
Income
$53,275
Expenses
$49,943
Annual Savings
$3,333
House
$0
Net Worth
$179,190
How do you find a qualified advisor? Let Wealthminder help you.
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