You don’t have to be superstitious to believe you can predict the future. In fact, if you think about it, you’re making predictions all day long. That doesn’t make you clairvoyant. For example, when I need to go somewhere, I assume that I can rely on my car to take me there. That’s because I drove it yesterday and the day before. But one day, something unexpected happened. Someone ran head-on into my car as it was parked outside my house. Totaled it. Yes, I may be the only person I know who’s gotten into a car accident while sitting on the couch. Stranger yet, a few years later I was driving up a hill and got hit by a parked car. Didn’t expect that either.

You can predict a lot, but you can’t predict everything. Life is full of risks like accidents, job loss, or serious health problems. There’s also the unpredictability of life itself, like a decision that didn’t work out as expected, or an amazing opportunity you don’t want to pass up. Planning for the future means minimizing your potential for risk and having ways to recover when the unexpected happens. 

Future-proofing your life

Preparing for an unpredictable future can involve a lot of “what if” and “just in case,” but there are lots of things you can do in your day-to-day life that can actually decrease your future risk. You’re probably already doing some of them.

Build an emergency fund. With accessible funds to cover three to six months of living expenses, you’ll be better able to handle a job loss or a large, unexpected expense.

Maintain diversified investments and plan for retirement. A diversified portfolio helps you weather the ups and downs of the economy. Starting retirement planning early gives you more options as you approach retirement.

Manage debt. Minimizing debt, especially high-interest loans, helps reduce the chance of default in the event of a change in your financial status.

Keep everything in working order. Regular maintenance of your home and vehicles can help prevent unexpected repair costs and extend their lifespan.

Choose health insurance wisely. Make sure your health care plan suits the needs of you and your family. If you’re approaching 65, learn about Social Security and Medicare so you’ll be able to get the coverage you need.

Prioritize body, mind, and spirit. Your physical and emotional wellness can reduce the risk of costly health problems. Also, education and strong relationships can lead to future personal and professional opportunities.

When life isn’t rainbows and unicorns

Insurance is something most people don’t want to think about. They just want it to be there when they need it. For that to be the case, you need to carefully balance cost and coverage. 

Life insurance. An understanding of the different types of life insurance policies – private versus group, term versus permanent – can help you decide which best suits your family and when it might make sense to let a policy lapse.

Short-term and long-term disability insurance. Disability insurance can be part of an overall financial plan if you feel you might not have enough savings to live on in the event of a disability that makes you temporarily unable to work and generate income.

Auto, home, and umbrella insurance. You might not think of property, casualty, and liability insurance as integral to a financial plan, but maintaining adequate coverage is all part of the equation that protects you and your assets.

Long Term Care. Nearly half of people turning 65 will need some form of paid long-term care during their lifetime. You will want to understand how your assets or insurance could cover this potentially large cost.

Beyond insurance. Preparing for the unexpected isn’t just about filling your drawer full of insurance policies. For example, developing a disaster preparedness plan can help you respond and be resilient in the face of a natural disaster or extreme weather.

It can be extremely empowering to prepare yourself and your family for a more predictable future. And financial planning is an important component for security and peace of mind. Your Arrivity financial planner can be your guide when it comes to deciding how to build your savings, balance your investments, and select insurance that’s right for you and your family. 

Questions to think about:

• Do you have a true emergency fund? If you’re tapping your emergency funds for things like vacations, it may not be there when you really need it.
• Are you confused about insurance? Your financial planner can show you what you might want to consider based on your age, family circumstances, debt, and assets.
• Are you approaching 65? It’s important to contact Social Security within three months of your birthday to avoid higher Medicare costs. Your financial planner can help you understand how premiums are calculated as well as provide resources for you to compare plans.

Action steps:

• Consider thinking about big decisions through the lens of future risk. If something might present a higher risk, ask yourself what you need to do to mitigate that risk.
• When you’re preparing to meet with your financial planner, be sure to gather your latest insurance policies so they can be considered as part of your overall plan.
• Keep in mind that planning for the future is something that will never be complete. Since your future is always changing, be sure you’re updating your financial plan, too.

The foregoing content reflects the opinions of Liz Behlke and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.