Using Life & Health Expectancy Scenarios
Financial planning for physicians shouldn’t stop at retirement. It’s unpleasant, but necessary to imagine what your situation might look like after the death or incapacitation of a partner. An early dose of reality can help you build a financial foundation in case you survive your spouse.
Why it’s necessary to imagine possible scenarios
Scenario planning is fun when you’re planning vacations, but not so enjoyable when it involves contemplating life’s worst events. Attempting to imagine the death of a long-term partner and then organizing the financial (and emotional) resources to carry on for up to 25 more years seems like too brutal an exercise to put yourself through. But if thinking about it for a minute would help you prepare for such an eventuality, the pain of imagining worst-case scenarios can be replaced by relief that the necessary insurance policies and investment plans are in place to preserve your financial security and protect your assets, should that scenario play out.
To keep financial planning realistic, and practically, rather than emotionally oriented as you lay the groundwork, make sure to keep projections within the context of your overall life plan. What do you see for yourself in the years ahead? How do you want your life to play out? What do you want to accomplish? How do you want to live? Then… what if something goes wrong? Can you imagine yourself getting old? Can you imagine yourself acquiring a debilitating disease? Can you imagine yourself becoming widowed? Can you imagine yourself dying?
The current trend in retirement planning is to focus on the positive. It’s exciting to dream of all the trips and leisure activities that await in retirement while putting an investment portfolio in place to fund that eagerly anticipated lifestyle. Naturally, nobody wants to think about how those dreams might be shattered by illness or an untimely death.
But this type of worst case financial planning is exactly where financial advisors can help doctors the most. By helping guide your mind to those darker places, a well-informed, trusted financial advisor can make it easier to contemplate scenarios you may never consider on your own. Then, working together, you can develop solutions that recast those scenarios in a less terrible light.
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