…and, defense may not be what you think it is
By Tom Strangstalien, Financial Protection Advisor
Offense, financially speaking, is focused on growth. Defense is focused on keeping what you have. Pretty simple concepts all-in-all. However, each has nuances that vary depending on your tolerance for risk, age, retirement goals, current and future lifestyle goals, and of course, income.
Income itself is one of your offensive tools. This includes the income you earn from working and passive income earned by investments. The other form of offense shows up in investment portfolio design and is generally about choosing assets or combinations of assets that have a high probability for growth… and generally, a greater degree of risk. And, of course, you can also play defense in your portfolio by choosing assets that are slower growing and less risky. The proportion of offense and defense in your portfolio is dependent on the variables mentioned above. This is where the advice of a professional investment advisor who understands your current situation, along with your goals and desires, is essential to your success.
As to other forms of defense, well that’s where I have spent my life helping people figure out. For example, during your earning years, your salary and other earned income is your most formidable offensive asset. But what happens to your plans if due to illness, injury or – God forbid – death, reduces or eliminates your income? How will you and your family maintain your standard of living? How will you be able to continue pursuing your retirement plans?
A substantial market for income replacement insurance has steadily developed for decades. (I include life insurance in this definition as it provides income for your family if you die.) There are as many options as there are individuals who need this type of defense, which means you have the opportunity to choose the type of insurance that exactly fits your current situation (including budget), and future goals.
A general feeling within the insurance industry, is that once a couple reaches the age of 55, there is substantial probability that one of them will need a form of long term care during their lifetime. I have personally witnessed this within couples that I have worked with throughout my career. That’s where another form of defense plays an exceptionally important role in protecting your immediate financial security and the integrity of your estate.
Now, like income protection insurance, there are many long-term care insurance options. To choose the option that’s right for you, you have to take into consideration how much tax you are paying and will pay. Again, the nuances can be quite subtle, but generally speaking, an experienced advisor will be able to show you all the ins and outs of the insurance products available.
One thing is for certain; the best time to do this type of planning and make your decisions is now. The sooner the better because, as you age, your options may become more limited, and for certain, the cost will increase.
If you would like a personalized tour of all the options that are right for where you are today and where you want to be in the future, contact me. I look forward to being your defensive coach.