How’s Your Crystal Ball?

I don’t know about you, but mine’s lousy.

If you’d asked me about a coronavirus a year ago, I wouldn’t have predicted this mess. I knew they existed. After all, we had seen two previously. And I knew the risk was there. Staff under Obama were seeing this as a realistic threat. But they had seen the MERS outbreak up close, so their concern was to be expected.

Looking forward to this fall, much less next year, we really don’t know what the next challenge will be. It could be a resurgence of Covid-19. Some are expecting that, although others don’t see it abating in warm weather. After all, it’s active in Tunesia, and that’s Sahara Desert country. So why assume heat will stop this thing?

Or the next challenge could be something entirely different.

The only thing guaranteed in life is change. The earth moves at 29.78 kilometers per second, so you aren’t in the same place in the universe that you were one second ago. With the sun and time in motion, you will never be in that same place in the universe again.

Get over it. It’s just how things work.

What Covid-19 suggests is a different definition for what it means to be “living well.”

Some people define living well in terms of things. But things don’t matter if you can’t use them.

Some people define living well in terms of “friends,” but it’s at times like these when you learn who really cares about you.

A more basic definition of living well is the ability to sustain yourself and your family through a crisis with minimal angst. You may not have a job nor know when your next income will arrive, but you can pay your bills, spend time with family with the peace of mind of knowing that your life won’t fall apart under financial stress. You can’t do that relying on what most states pay for unemployment. And nothing breaks up a family faster than financial arguments and stress.

Further, if you’re unlucky enough to be hospitalized with the coronavirus and you have standard employer or ACA insurance, you’re likely to be looking at a bill for around $10,000 after insurance pays what it does. With complications, that final bill could be more than double that amount.

A lot of people don’t have that emergency fund, and that’s a problem.

It’s also why, as early as possible, you want to start setting money aside. The standard advice is that you want 6-months of income that you can access in emergencies. Apart from winning the lottery, there are several ways you can build that fund:

  1. Regular deposits into a checking account that are then rolled into CDs as the amount grows. If working with a US bank, the savings account is insured by the FDIC and the CD is protected by the strength of the financial institution. Pick a strong one.
  2. Buy permanent life insurance (whole life or some version of universal life). This builds cash value over time, against which you can borrow as needed. The value is guaranteed by the insurance company (again, pick a strong one) and there’s an interest rate guarantee as well. Unless you select a variable life plan, your money is safe and assuured to grow regardless of what the stock market does.
  3. If you’re over 50 and have money, you will want to consider an annuity. In better times they aren’t sexy in terms of growth potential, but again you are protected in most plans against loss. The money will be there for you.

Option 2 should be extremely attractive to people in their 20s, when a small sum (say $45 per month) can buy a large permanent insurance policy. Even if you don’t need it to meet emergencies, think about having an extra $200,000 when you’re ready to retire. Would that have made a difference to your parents?

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