We all have a plan or every facet of our life. We have a savings plan, a retirement plan, a life insurance plan, and many, many more. We either have the one that we took the time to craft and implement or the default plan. Guess which one is usually better? (Hint: It isn’t the default plan).
Our savings plan is either proactive (we save first and live on what’s left) or we spend, and if there’s anything left over, we save it (the default plan). I’ve heard it said that those in the latter group wind up working for those in the former group.
The same is true of our retirement plan. We can do some rudimentary calculations to ballpark how much income we’ll need in retirement and save accordingly or we can wing it and hope everything turns out okay. It might, but it’s not likely.
When talking to people about life insurance, I always ask if they have a will, and then I tell them that’s a trick question. It’s a trick question because everyone has a will; either the one they made or the one their State made. Every State has intestacy laws that detail how assets are to be distributed for those people who die intestate (without a will).
General Eisenhower famously said that plans are worthless, but planning is invaluable. He was talking about war, but it’s true in our lives as well. The planning process should be devoted to developing an overall strategy to achieving the goals, whereas the plan will be made up of specific tactics to get us there. The tactics may change as circumstances change, but the strategy, if sound, will keep us on track.
The same degree of planning should go into our life insurance planning, but, unfortunately, it rarely does. Because the odds are that most of us won’t die any time soon, planning in this area is oftentimes haphazard or sometimes, nonexistent, much to the detriment of the individual and his/her heirs.
Developing plans in the areas of savings, retirement, life insurance and wills should be a major priority. Unfortunately, most people spend more time planning their vacation than they do on these critical areas. Don’t be that person. Address these area sooner rather than later.