“What have you done for me lately?” When’s the last time you asked that of the person you see in the mirror every day when you’re getting ready for work?
I know you have asked your employees that, and I’m sure you have asked your kids that. But when’s the last time you did something for yourself? Let me put it this way. If you had a goose that laid golden eggs, which would you insure: the goose or the golden eggs? In this analogy, you are the “goose.” You produce the golden eggs, and I’ll bet you have every one of your golden eggs insured. Those “golden eggs” include your house, cars, boats, practice, etc. — all the assets you possess.
Let’s get back to you, the goose. Are you properly insured? Yes, many of you feel you are “insurance poor.” I’m not really sure what that means, other than a person who is “under-insured.”
If you are referring to the premiums that you pay, then you may be “premium-poor.” That is a whole different problem and can be cleared up very easily by reviewing what you currently have and seeing if you can increase any deductibles. You may have some coverages that “overlap,” and this should be corrected, too. Sometimes you may be able to purchase a “package” policy that covers in one policy what you now have covered by numerous policies. That alone can save you money. My recommendation is to make sure the “eggs” that you have are insured, but make sure you (the goose) are also covered in the form of a life-insurance policy. Remember, if you aren’t around, then there are no new eggs.
That takes care of one area that is a problem if you die earlier than expected. That is what life insurance does, and does well. It fills in the “eggs” that you did not have time to produce. By the way, disability insurance does a similar job, but it does it when you are still around but cannot work and produce “eggs.”
Now let’s look at another purpose for life insurance. What if you live longer than expected? What if you live long enough to amass a lot of golden eggs? If that happens, Uncle Sam comes along and wants to take a good portion of your hard-earned eggs for the government. In fact, the government can take as much as 55% of everything you have built. That’s a lot of eggs! Those eggs are not cheap, and you probably want them for your family. Well, life insurance can supply some “cheap” dollars that can be used to pay any estate taxes that are due, so the eggs can remain intact and be used by your family.
Have you ever thought that you may in fact “live too long?” Do you have any idea what the chances are that you will live to age 90? If you are age 60, your chances of seeing age 90 are 19%. If you are age 85 now, then the probability that you’ll try to blow out 90 candles is 51%.
This creates a few problems that you need to be aware of. The first one is that you may have a good amount of wealth and may face an estate tax problem in the future. We have already addressed that. You may want to start some financial planning now to avoid a large estate tax bill that your estate may face in years to come.
The second problem you face is making sure that if you live longer than expected, your retirement plan will live as long as you do. Unfortunately, a lot of retirement plans end long before the person depending on those plans does. How can that happen? Easy. The funding that many people put into their plan did not figure on them living a long life. That’s the first problem. The second is inflation, which can erode any retirement plan.
What about your plan? Are you putting away enough so you can enjoy a long and secure retirement? Will taxes and inflation erode your plan? The time to check on this is now. The longer you wait, the harder it is to make up any shortfall that your plan may face in the future.
It’s really tough these days to get an office up and running and productive. It’s even tougher to do it all over again when you are in your 70s or 80s!
So the next time you look into that mirror, remember there are two people who are asking you, “What have you done for me lately?” There is you asking yourself that question, and then there is you at retirement age asking yourself at your current age that same question.