Approximately 1.3 million people filed for bankruptcy last year.
Why? Well, one reason is poor risk management.
Many American families neglect to plan
for unexpected job loss, illness, injury, or death.
Only 22% have enough savings to cover basic living expenses for longer than 6 months.
Average unemployment period lasts for approximately 7 months.
Only 35% have disability insurance.
Average disability claim is for 31.5 months
95% of disability causes are not work-related.
Only 34% of individuals have wills.
Why does this happen? Well, we under-estimate
the risks and over-estimate our abilities to avoid them.
For example
51% of US population are afraid of snakes.
Yet there were only 5 estimated deaths from venomous snake bites that occured last year.
But 94% of the US population are not afraid of riding in motor vehicles.
And there were 32,675 estimated deaths from automobile accidents last year
So we under-estimate our day to day
risk because we don’t think it can happen to us.
For example
78% of workers believe the only 1 in 25 people will become disabled.
Actual odds are 1 in 4.
As a result of poor planning, more and more
individuals risk financial ruin.
Unpaid medical bills cause over 62% of all US personal bankruptcy filings.
69% of families cited a significant impact to their financial stability after the loss of a spouse.
28% of 25-year old couples will have one spouse pass away before the age of 65.
Emotions and misinformation are at the heart of these behaviors
Avoidance
This problem will go away on its own
Anxiety
I just can’t deal with this
Miscommunication
Talking about it makes it more likely
Illusion of Control
These risks don’t apply to me
Financial Advisors can help!
Like a tutor helps a student to study to ace an exam, a qualified financial advisor can help you to make sure that you have protected yourself and your family against unforseen events.
Research shows that families working
with professional financial advisors...
Are more-likely to have insurance and other protections in place
Feel more ready to meet financial challenges
Make fewer financial decisions based on emotion
Stay on budget and save more
Aren’t financial advisors expensive though?
Actually, the cost is small relative to the benefits you receive. An average family who hires an advisor for a comprehensive consultation including evaluation of life insurance coverage pays about $720. Isn’t that worth it?
Let's take a look at two comparable families and their finances.
Family 1
Income |
$58,000 |
Expenses |
$54,810 |
Annual Savings |
$3,190 |
House |
$188,900 |
Net Worth |
$77,300 |
Life Insurance |
$493,000 |
Family 2
Income |
$58,000 |
Expenses |
$54,810 |
Annual Savings |
$3,190 |
House |
$188,900 |
Net Worth |
$77,300 |
Life Insurance |
$0 |
One year later
Family 1
Income |
$30,000 |
Expenses |
$43,010 |
Annual Savings |
-$13,010 |
House |
$192,678 |
Net Worth |
$355,283 |
Family 2
Income |
$30,000 |
Expenses |
$43,010 |
Annual Savings |
-$13,010 |
House |
$192,678 |
Net Worth |
$57,018 |
Five years later
Family 1
Income |
$33,122 |
Expenses |
$45,661 |
Annual Savings |
-$12,539 |
House |
$212,732 |
Net Worth |
$279,015 |
Family 2
Income |
$33,122 |
Expenses |
$42,501 |
Annual Savings |
-$9,379 |
House |
$0 |
Net Worth |
$66,283 |
Seven years later
Family 1
Income |
$34,461 |
Expenses |
$46,797 |
College Support |
-$50,000 |
Annual Savings |
-$62,337 |
House |
$221,326 |
Net Worth |
$585,400 |
Family 2
Income |
$34,461 |
Expenses |
$43,580 |
College Support |
$0 |
Annual Savings |
-$9,120 |
House |
$0 |
Net Worth |
$85,857 |
Retirement Time
Family 1
Income |
$0 |
Expenses |
$62,771 |
Annual Savings |
-$62,771 |
House |
$342,771 |
Net Worth |
$1,041,442 |
Family 2
Income |
$53,275 |
Expenses |
$49,943 |
Annual Savings |
$3,333 |
House |
$0 |
Net Worth |
$179,190 |