You want to do what’s right for your family—we all do. And you know that supporting and protecting them financially is a big part of helping your family in the future. The problem is, we often get so caught up in the present day that we forget to consider what that future could actually look like. People have a tendency to picture their lives one way and assume that that’s how everything will play out—but that isn’t always the case.
If you’re reading this, you’re probably already saving for the future. But whether your goal is to leave your family with a lucrative business or to put your kids through college, there are some variables you should consider as you save for the future.
The Dead Don’t Save
We don’t like to think about it, but death is inevitable. Of course, you know this—it’s one of the reasons you started saving money in the first place—you know you won’t always be there to support your family. But let’s say your goal is to save $5 million by the time you pass away. To do that, you decide to save or invest a specific amount of money each year until you retire. If you stay disciplined and keep this up, you’ll reach your goal and your family will have a few less worries in the coming years.
But what happens if you pass away before you reach retirement? It’s a sad truth, and one no one likes to consider, but it happens. It takes time to save and grow a substantial amount of money, and sometimes we lose that time unexpectedly. While you might be the most disciplined person in the world, you can’t continue your savings program if you pass away unexpectedly. That’s why you need a plan and a safeguard in place for that scenario. If you pass away suddenly, that shouldn’t mean that you leave your family with less than you intended.
If You Can’t Work, You Can’t Save
The same thing can happen if you become disabled. If you’re in an accident and can no longer work, that puts an unexpected halt in your income as well as your savings plan. You might be able to work a different job, but it might be one that doesn’t pay as well or doesn’t allow you to put as much money aside.
Just like our own mortality, people don’t like to consider the possibility of being suddenly unable to do a job they’ve done for years—it’s scary and it’s intangible. We tend to tell ourselves, “Somebody could get into a horrible accident,” or “Somebody will die today”—but we never think it could happen to us.
Of course, there’s no reason to go through life worrying or expecting the worst. But if you want to properly prepare your family for the future, you have to consider all the possibilities—no matter how improbable or unseemly. You need to have a plan to replace your income if you become disabled and are unable to work.
How Much of Your Earnings Will Be Allocated to Taxes?
Death and disability can eliminate your ability to make money, but a poor tax-planning strategy sometimes means you lose money unnecessarily or end up paying large sums at inconvenient times. When you’re saving for the future, you have to consider not just how to accumulate, but how to minimize your taxes now and ease your tax burden later. For instance, if you own a business and plan to sell, you probably don’t want to pay the taxes on the sale all at once. But if you allocate your profit into separate investments, you can disperse the taxes you owe so you’re not taking the hit in one large payment.*
Saving money is a start, but truly optimizing your savings plan requires forethought and intentional strategizing. You have to consider even the most unlikely events and create a plan to safeguard and supplement your income should your life take a few unexpected turns. You work hard for your money, and you’re working hard to prepare for the future—you want to make sure none of that goes to waste.
If you’d like to learn more about savings strategies and how to protect your income, give us a call or schedule a consultation. Take luck out of the equation—we’ll help you plan for the worst so you can hope for the best.
Financial Literacy LLC, nor New York Life or its affiliates, provides tax advice. Please consult your own tax advisors for tax advice.
SMRU 1889658 | EXP 2/23/2023
