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Protect Your Wealth

You’ve worked hard and have been financially responsible. You’ve lived on less than you’ve made and saved those extra dollars. Let’s safeguard what you’ve built and look at four things that you can do to protect your wealth.

protecting wealth

Make sure you have the proper insurance in place:

Having proper insurance in place plays a critical role in protecting your wealth in the event of the unexpected. You want to make sure that you regularly review your health, homeowners, and auto insurance to ensure that you have the proper protection that is needed.

You also don’t want to forget to insure yourself and your family against any possible loss of income that may occur. Although not pleasant to think about, having a proper amount of life insurance is necessary in protecting your family’s financial picture.

Most experts recommend having enough life insurance to cover 10 times your annual income. This ensures that your family will be taken care of in the event of your death. My husband and I each have 20-year term insurance. We get the coverage we need, at a price we can afford.disability insurance

If your employer does not already offer it, you may also want to look into disability insurance so that an illness or injury will not destroy the savings that you’ve worked hard to build. Disability insurance will not replace your income, but it will provide a buffer, paying out 60% of what you would normally be making.

It might not seem likely that this type of insurance is something that you would need, but the Social Security Administration estimates that one in four 20-year olds will become disabled and be unable to work before the age of 67, so it’s better to be safe than sorry and make sure that you’re protected.

Have an emergency fund:

Setting aside 3-6 months of your living expenses will serve as insurance for the wealth that you have built and are continuing to build. The money is there when you truly need it, without having to go into debt or withdraw from your retirement savings.

We often think of our emergency fund in the case of job loss. Another good use for your emergency fund is to use it for any home, auto, or medical insurance deductible. We have enough to cover all of our deductibles. This meant that we could raise the deductibles on our various insurance policies and thus lower the premium payments freeing up some extra money each month.

Have an estate plan:

I have many friends who have avoided this step, because planning for your death is not the most glamorous of topics, but having a current will in place is a critical step in your financial plan.

Your estate plan will allow you to reduce administrative expenses and legal fees upon your death. It will also mean that you preserve and leave a lasting legacy for your loved ones. Finally, your will allows you to control, manage, and allocate who receives your assets upon your death.

estate planning

Name your designated beneficiaries:

As important as it is to have a current will in place, it is equally important to name your designated beneficiaries to ensure that your assets are distributed according to your wishes. Be sure to name beneficiaries on any assets that will allow it such as your life insurance, pension plan, IRAs, or 401 (k)s.

Your Turn!

  • What steps have you taken to protect your wealth?
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