For the last few weeks, social media, conventional media, your holiday celebrations, and your water cooler conversations have been full of talk about “New Year’s Resolutions.” Those of you reading this doubtlessly are familiar with the cycle of broken resolutions despite the best of intentions. I’ve come to the conclusion that the best time to do something to improve yourself isn’t because of a calendar, but because it makes sense for you now.
I’ll share a personal story: in November of last year I realized my personal fitness regimen was waning. It would have been real easy to justify another two months of sloth and start fresh in January. I also knew I’d be feasting on an inordinate amount of baking from thefoodflirt.com over the holidays and getting a head start and some momentum would be helpful. So I got started….in early November. As a result I’m pleased to say I was able to guiltlessly enjoy the many treats my sister Katie (The Food Flirt) baked while I was in Ohio in late December.
As it relates to our financial lives sometimes our calendar doesn’t always line up with God’s timing. I had several acquaintances die tragically and unexpectedly between September and December. They weren’t clients so I don’t really know how prepared they were (or weren’t) financially in the case of their premature death. The point is, if they weren’t financially ready to die and said, “I’ll sit down with an advisor after the new year,” (sound familiar?) it would have been too late.
As my regular readers know, I’m a big proponent of Indexed Universal Life Insurance as part of an overall retirement savings strategy, particularly for the tax free cash flows it can generate for its owner while alive. One of the oft overlooked benefits of IUL is that because of the tax free death benefit it is self-completing. Live to a ripe old age and use the tax free cash while you are alive. Die tomorrow and your loved ones get a big check. It takes care of you either way. If you contribute to a Qualified Plan like a 401(k) and you die tomorrow all your loved ones get is what’s in the account now, despite your best intentions to make regular contributions for the remainder of your working life.
I want to make another point about New Year’s Resolutions: We all have a tendency to overestimate our ability to keep them and over commit. This is true of our financial resolutions as well as things like going to the gym (how many multi-year memberships are sold to people that stop going by April?). If you do make a resolution to sit down with an advisor this month, make sure the commitments you make are ones that realistically you can keep. It does no good to purchase a plan you cannot afford. Find something that has payments you can comfortably afford.
On the topic of affordability, maybe an IUL isn’t something that makes sense for you right now. That’s fine. Your family still deserves the peace of mind and security life insurance offers. Term life insurance offers death benefit coverage at a guaranteed rate for a specified period of time (hence the name “term”). The good news this coverage is much less expensive than many people think. For example, most reasonably healthy 35 year old males can get $500,000 of death benefit coverage for between $25 and $50/month, rates guaranteed for 20 years. This is ideal for those on a budget, particularly supporting minor children. Instantly check out what your policy would cost here (no need to provide contact info).
The important thing is do something now; not because it is the New Year, but because you need it. Secondly, make sure whatever you do is comfortable with your current budget.