Risks
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Our role in the counselling process is one of examining your balance sheet as it pertains to various risks you may face over a working lifetime. In other words, we will examine your estate and financial picture, pointing out the areas where these risks exist. It is, however, solely your decision as to whether or not the risks need to be dealt with. A risk that can unexpectedly interrupt your earnings may have a short or even long term affect on your assets.We all have visions, goals or dreams starting from a basic lifestyle (home, car, vacation etc.), to building financial security over time and eventually long-term financial independence in retirement. Some of these goals and dreams are individual, some for you and your spouse, others for your children. The bottom line is that some goals you will want completed whether or not you’re here to see their completion.
Many times during this process we lose sight of the fact that what we envision is predicated on an ongoing ever increasing foundation of income . . .
Our role is to point out the risks that could prematurely interrupt that income and the accumulation of assets.Your financial potential can be substantial over time assuming no interruptions. For example: at age 40, an income of $50,000 per year with average annual increases of 4.00% totals $2,082,295 by age 65.
The most obvious risk is the risk of a death, after which the paycheques stop immediately. What is left in your estate will then be used to produce replacement income - so we will examine this area to see if it is sufficient to provide enough cash to liquidate liabilities and provide the level of income you desire for your family.
Dr. Marius Barnard, member of the first heart transplant team on critical illness coverage: When his patients "didn’t lose their life, they lost their life savings" after surviving once fatal illnesses such as cancer, stroke and heart disease. He states, "You need insurance not because you are going to die today, but because you are going to live." If you are diagnosed as having a critical illness, the last thing you want to worry about is how to pay the bills.
In the event of an illness or accident that permanently disabled you, this too would stop or impair your income. We need to examine how you and your family would be affected in achieving your goals and objectives in this regard. A partial or recurring disability could present a special problem, interrupting your paycheques or reducing income from time to time, over your lifetime.
Early retirement packages are all too prevalent these days causing a number of roadblocks and adjustments in your personal and family goals. Unless you can recoup the dollars you planned to make during the later part of your career, things may not work out as you had planned. One of the real threats in retirement is not losing investment money, but running out of it.
The business you presently work for, (or may work for in the future) could run into difficulty. They may experience loss of market share, downsizing, or may even go out of business. Again the income stops.
Eventually, assuming all evolves the way it is expected to, you will work to a normal retirement date and have the financial independence you wish in retirement. This area should be examined in order to determine if you’re on track in reaching your objectives.
The unfortunate end result of an unexpected risk occurring is the loss of opportunity it can cause in your overall financial planning. Loss of time, energy, investment opportunity, access to credit etc. will undoubtedly impair the acquisition of potential assets and long term comforts. Proper structuring of a security program can soften this potential downside.
This is a broad overview of the risks that can affect your cash flow. At this stage it is important to examine your balance sheet as it pertains to these "risk areas" and decide which are of concern today. Ideally, if we are able to cover the major risks, we can secure your future for you and your family. With the risks taken care of, you can concentrate on working effectively and enjoying life.
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Contact Information
Keith L. Hatton,
CFP, CLU, CH.F.C., TEPTelephone: 780-482-2745
FAX: 780-488-1025
Postal Address:
#408 - 9707 - 110 St.
Edmonton, AB,
T5K 2L9
Canada
Call us toll-free at (866) 444-2745 with questions or comments about this web site.
Copyright © 1996-2011 Hatton Financial Inc.
Last modified: December 02, 2011
