By: John P. Napolitano, CFP®, CPA, PFS, MST
Now that I have decades of experience working with families and recognizing what causes many folks to spring into action, I can easily say that transitions cause the most angst. Transitions can be expected and simple like having a baby, getting married or retiring. But transitions are often unexpected, such as a law suit out of left field, major business transaction, premature death, divorce, or the loss of a loved one or business partner. Transitions in general are a major reason why many ultimately hire professional help.
There is no way to avoid transitions. Change is a part of life, like it or not. But anyone can, at any time, stress test their financial health for some of the known transitions in your life to see how well you are equipped to handle that change. For example, most retirees understand that once they stop work, that their benefits may disappear and that they may become personally responsible for whatever insurance they may need in retirement. But most young families do not consider their loss of benefits that may accompany a loss of employment. A young family with minor children could be permanently harmed without the proper life, disability or health coverage – even if it’s only a temporary situation.
If you are suddenly faced with an unexpected transition, don’t panic.
Drop back, assess the entirety of the situation and begin to piece together the steps needs to successfully get to the other side of that transition. Use the opportunity to solve the issue at hand and then do some planning for the other known and unknown transitions that may occur during your lifetime.
It’s not like I spend my time sitting around wondering what is about to hit the fan. On the contrary, I live a fun life that many would consider somewhat care free. But consider this; with summer in full swing, I’m sure many have family visiting from out of town with a lot on the calendar. Do you sit around and wonder what would happen if a water pipe bursts in your home leaving the home unlivable from water and mold damage? Probably not, and neither do I. But that’s because I know what I have for homeowners insurance and what my policy covers for alternate living arrangements while the home is being assessed and repaired. Many people cannot say the same.
Financial planning will not prevent bad things or unexpected transitions from creeping into your life. But a comprehensive planning engagement will shine a spot light on the areas that may be deficient in your life so that when a transition does occur, chaos will not ensue. In order to obtain the comfort that many want, do not settle for an investment or life insurance type of financial plan only. Make sure you work with someone who is committed to the totality of your family and financial well-being so that your next transition is just that, another step in the journey of life.