What is the value of ALL your future paychecks?
When I was 32 years old, I decided to make a career shift to the financial services industry.
Our firm requires that a candidate experience our financial planning process as a client before being hired.
The advisor helping me reviewed our car insurance. He asked me to imagine I was a victim of a car accident that resulted in my permanent disability.
“Besides the car, what have you lost?” he asked.
“My ability to work. My ability to earn money, gone forever,” I responded.
A permanent disability (or death) means that you forgo ALL your future paychecks. I earned $150,000 in the previous year.
Here is the math the advisor used to estimate the loss of all my future paychecks:
30 years until retirement x $150,000/year without raises or promotions = $4,500,000.
At that moment, everything changed for me.
The $4,500,000 got my attention. If I became permanently unable to work due to sickness or injury and/or if I died, then all future money that I would ever earn disappeared.
Even more meaningful was considering everything I hoped and dreamed I was going to use that money FOR also disappearing.
Here are a few of the aspirations that I’ve had for my family:
- Family vacations.
- Educational opportunities for my daughter.
- Improvements to our home. Maybe a second home one day.
- Ability for my wife and me to choose where and how we live.
- Ability for my wife and me to choose where and how long we work.
All those things are important to me. All those things are negatively impacted (or potentially gone forever) without the presence of the $4,500,000.
This is why life insurance and long-term disability insurance are important. Depending on your age and your health, for a mere 3% to 5% of your gross income, you can protect the vast majority of that $4,500,000.
Proper implementation of those two protection items helps make sure that your aspirations for the future will happen. NO MATTER WHAT.
What is the value of ALL your future paychecks?
How well is it protected?
September is Life Insurance Awareness Month. Please take a moment to consider your life insurance and your long-term disability insurance in the context of all your future paychecks.