“Atlas through hard constraint upholds the wide heaven with unwearying head and arms.” –Hesiod
My Wednesday morning started with five 400-meter runs, uphill, carrying a 35# sandbag. OK, maybe “run” is a bit of an exaggeration – it was more of a trudge, and there might have been some walking in there toward the top. I hated every second of it, but I kept going because, well, that’s just what you do. When I thought about it later, it struck me as an apt metaphor for the way life feels sometimes – an endless uphill struggle with the weight of responsibility resting heavily on your shoulders. This is particularly true for anyone who is the primary provider for their family. As my colleague Carrie pointed out in her recent blog post, more and more women (including me) are finding themselves in this position, whether by choice or necessity. Most of the time I am able to face each day as it comes and maintain an upbeat outlook on life, but sometimes the enormity of this responsibility is paralyzing and my mind races with worries – what if something happens to me? Have I prepared for the worst possible outcome? What more can I do to ensure that the people who depend on me to keep going will be OK if I can’t?
Since everyone loves a list, let’s break this down into 5 areas that you definitely want to address if you are the primary provider for your family:
- Life Insurance – This one is pretty obvious, and I hope most people have some amount of life insurance in order to provide for their dependents should the worst come to pass. But do you have enough? Many companies provide life insurance as an employee benefit, but the standard amount will probably not be enough to replace your salary for an extended time. As a starting point, consider your current salary and how old your children are, so you can estimate how much financial support they will need and for how long. Beyond that, you may want to provide your spouse with your lost income until retirement age. Take these factors into consideration when determining the length of the term and amount of coverage you need.
- Long Term Disability Insurance – This one is a little less common, but no less important than life insurance. Think of it this way – if you become disabled and cannot perform the job that supports your family, how will you replace your income? What if your disability adds to the household expenses in the form of ongoing medical care? Now you’ve not only lost your earning power, but you’ve also become a liability to the family you once supported. Don’t let that happen.
- Estate Planning/Will – Many times younger people who are still in the asset accumulation phase tend to put off drafting a will, despite its importance. It is especially imperative if you have young children, since it allows you to determine who will become their guardian if both you and your spouse are gone. Make sure your beneficiary designations are up-to-date for any IRAs, 401(k) plans, pension plans or life insurance policies. For more complex estate planning strategies you might want a trust – your financial advisor can help you figure out what you need to do to make sure your estate plan is sufficient.
- Retirement Savings – If the worst doesn’t happen and you live to a ripe, old age, you need to be sure that you are saving money to provide for your golden years. As the primary earner, the bulk of this responsibility falls to you to contribute to your company’s 401(k) or another retirement plan, but it is equally important to include your spouse in your retirement projections and contribute to a plan for him or her if you can. Again, your advisor can help you figure out how much you need to be putting aside and how to navigate the ever-complicated IRS rules and requirements for retirement savings.
- Education Savings – Though not as imperative as the first four points, saving for your children’s education expenses will relieve them of significant financial pressure when they are in school and will help them avoid taking on massive amounts of student loan debt. You can rest easier knowing that if you predecease your spouse and children, you won’t be leaving them with an insurmountable tuition bill. As with retirement plans, there are several investment vehicles available to you for education savings. Work with your advisor to determine the best plan for you and your family.
Shouldering the burden of financial responsibility can make you feel like Atlas, but it needn’t crush you. With a little planning and preparation, you can weather the uphills, savor the downhills, put down the sandbag every once in a while and live fully in the present.
Sarah DerGarabedian, CFA Financial Advisor