Gilroy Today 2007 05 May/April - Page 12

Is your financial plan “puzzle” missing a piece? Many people believe that you need to be wealthy to have a financial plan. The truth is everyone should have one. Many people confuse a product like an IRA or a 401(k) with a comprehensive plan. While these products may represent a significant piece of the puzzle, they are not the whole puzzle. So what does a complete and viable plan look like and what piece of the puzzle should you start with? Developing a plan requires some thoughtful consideration, beginning with the end in mind. The plan should involve a balance of savings, equities, retirement accounts, life insurance and disability insurance in the early years. Later in life, the plan should also include “long term care” coverage, followed by estate planning, which takes into consideration the size and future plans for the estate. The first piece of your financial plan ‘puzzle’ should be Life Insurance. Though life insurance is often overlooked as part of a portfolio, no financial plan is complete without it. Life insurance helps insure that a personal tragedy does not become a financial tragedy. It pays the mortgage, buys the groceries, pays college tuitions and allows your family to remain in the world you created together, by replacing lost income. If you have people relying on your income, life insurance is an obligation. Another piece of your puzzle should be Disability Insurance, which provides replacement income for you and your family should you become injured or sick and are unable to work. Disability not only causes a loss of income to the family, but it also brings with it the added expense for medical care and rehabilitation. Add this to the normal obligations of maintaining a family, and it is possible for even a good-sized estate to disappear rather quickly when prolonged disability occurs in a household. Providing for a replacement income will help lessen the impact caused by a disability. All this begs two questions: How much and what type of insurance do you need and where can you turn for help? Just like putting together a puzzle, it can be hard to get started if you don’t have a picture to go by. Take the first step and consult with a credentialed financial professional who can help you put together a picture of your complete financial plan. by Jeffrey M. Orth, CSA, ChFC A7JC-0501-01 12 MAY/JUNE 2007 GILROY TODAY