The COVID-19 pandemic, and its unprecedented effect on our lives, points to a need that many of us have avoided or not considered at other times: the need to prepare ourselves financially for the future. We now know, more certainly than ever, that we should have our affairs in order so that we can be ready for any possibility.
Some preparedness has already begun; multiple news reports have cited a surge in the number of Americans tidying up their legal and estate-planning affairs. Anecdotal evidence points to a sharp rise in the number of people calling their attorneys, creating essential documents such as wills, and seeking assistance from notaries.1 During “normal” times, surprisingly few people write wills or complete other important financial documents. An early 2020 estate-planning survey conducted by Caring.com shows that only about 24 percent of U.S. adults had created a will and only 6 percent had an advanced health-care directive.2
While it shouldn’t take a pandemic to get our financial lives in order, now is a good time to assess your own financial matters to ensure you are prepared.
Do you have savings set aside?
Experts recommend establishing an accessible fund, with an amount equal to three to six months’ worth of your salary, so you are able to cover life’s what-if moments as needed. With many of us working from home and spending less on transportation and luxuries such as vacations, eating out and even new clothes, this could be a smart time to set aside extra funds that may be needed later. Historically, most Americans have not been good at saving money. A Bankrate survey from 2019 indicates that more than a third of Americans would need to borrow money in order to pay an unexpected expense of $1,000.3
Is your financial plan current?
Amid market volatility, some investors discover they have less tolerance for risk than they anticipated. Volatility can leave your portfolio over-weighted in some sectors, requiring it to be rebalanced to reflect your desired mix of investment vehicles. Now is an optimal time for a financial checkup that includes talking with your advisor, reviewing your long-term goals and making sure your plan is right for your goals and risk tolerance. Your financial plan not only serves as a roadmap; it also can be a source of comfort and provide a sense of control from knowing your strategy is built on a rational foundation. That’s especially important now.
Is your insurance coverage adequate?
It is a good idea to evaluate your insurance needs at least annually, and the pandemic makes such an appraisal timelier. As an example, if you are working from home, you may be driving much less than you were. It is possible that your reduced mileage could help you to reduce your auto insurance premiums. Check with your agent to see if you are eligible for a discount. Some insurers also have seen an uptick in interest in life insurance, and most healthy applicants can purchase it. However, at this time it is especially important to be careful about shopping for insurance so that you understand what is covered and what is not. Insurers caution that they are scrutinizing applications more than ever, due to a rise in claims.
Have you made your end-of-life wishes known?
Developing a will, establishing financial and medical powers of attorney, and creating any healthcare directives are crucial steps in making sure your wishes are respected and assets are easily transferable to heirs. A trust officer or attorney can help you get started. D.A. Davidson Trust Company also offers “What My Family Should Know,” a workbook that enables you to document various aspects of your life, including important financial information and the location of personal documents.
Your financial advisor can help you get your financial house in order during a time of uncertainty, and at any time. He or she can provide a range of financial ideas, recommendations and information, while also serving as a sounding board as you consider financial decisions; helping you stay focused on the big picture; providing insight based on sophisticated investment modeling tools; and providing specific ideas and strategies based on your unique situation.
1 Coronavirus leads to surge in wills: ‘Everyone is thinking about their mortality’. ABC News. 2 April 2020.
2 2020 Estate Planning and Wills Study. Caring.com. 2020.
3 Survey: Most Americans wouldn’t cover a $1K emergency with savings. Bankrate. 16 Jan. 2019.
This material is being provided for educational and informational purposes only. Information contained herein is believed to be reliable, however; we can make no guarantee as to its accuracy or completeness. The information in this publication is not investment or securities advice and does not constitute an offer. Neither the information nor any opinion in the publication constitutes a solicitation or offer by D.A. Davidson or its affiliates to buy or sell any securities, options, or other financial instruments or provide any investment advice or service.