What’s Your Emergency Plan?

Have you got an Emergency Plan?I was doing some catching up on my reading this morning. I had commented a couple of days ago on a blog in Our Next Life on Financial Independence, which led me to go and look at Jim’s blog  Wallet Hacks. He has a great style of writing, very clear and easily followed. Even better he is Financially Independent because he sold an earlier blog, and he enjoyed it so much he started again!

In reading through a set of his posts, his Emergency Checklist struck a chord. He recommends being prepared for any type of emergency that might hit your family, from a sudden replacement of a car, to the loss of a job. It triggered me into thinking it is time to review my emergency planning.

It is a lot simpler today, than it would have been a few years ago. It is even more pertinent because the company my husband works for is going through a redundancy programme just this very week, so it is very current. In addition, a neighbour died earlier this week unexpectedly, which has made me think. Get Organised!

Now, in our filing cabinet, there’s a brown A4 envelope, marked ‘I hope you don’t ever need this’ but in it is, the starter for 10 for an emergency plan. It details where the bank accounts are, what investments there are, where our will is held etc, but I haven’t looked at in several years. So time to refresh it.

However that really is only the starter. If my husband were to get laid off from his part-time work, it wouldn’t be a disaster because it is money we weren’t planning on having in our retirement, but we would still need to make some adjustments

• Cancel the pension fund payments, related to his income, or rather decide when these need to be cancelled, as we might still be able to invest a few more months, within the tax restrictions.
• Cancel the professional engineers subscription
• Review our spending, just to see whether there are a few extra economies we want to make, because our buffer is not quite as big as it was

Even worse, what if one of us were to die suddenly, would we be ok? We know there’s enough money to pay for funerals etc, so that isn’t a problem, but we would need to work out exactly what income would be coming to the survivor etc, and what agencies need to be contacted.

My lists have a slightly different profile, than someone younger and still working and with young children. For instance, does your will cover guardians for your children under 18 – it should do!

Given I am already retired and have a regular pension, my lists cover the death or long-term illness of a spouse, a pension fund collapse, or a banking / government crisis. I live in the UK, and given recent experiences, think 2008/9 financial crisis, the Cyprus crisis a few years ago, the Greek financial collapse etc. Not because my investments might drop, but last year in Greece, they had the position where the government cut pensions, money from ATM’s was restricted to a daily amount of around $60. If you didn’t have a bank card, it was some days before banks were opened to allow people to withdraw around $120 a week! People literally couldn’t afford to buy food.  The Economist has a good blog entry on it here.  I have two current (checking) accounts, just in case one bank might go under, and have had since 2009. Then all our salaries, all our savings were in one bank. Not any more! Yes, a lot would be covered by government guarantees, but how long would it take to get access to it? Or it could be like Cyprus in 2013, when the bank doors open again, every investor with more than $100,000 had a 6.75% tax imposed on their accounts.

It is also important to consider our ‘digital’ footprint. Your Facebook account, your twitter account, Pinterest, our many online subscriptions – I could go on for ages. In my case, I also have to consider what happens with this blog.

I’m not normally a ‘doom and gloom’ person, but it doesn’t hurt to have a plan (ever the project manager). Once you have a plan, document it, put it away and review it each year. Then get on with normal life. You can stop worrying about it….

I am starting from a good place. When we retired, we drew up new wills, put Power of Attorney in place both for our finances but also long term care, if dementia etc should strike etc. I can recommend doing these as soon as you can and reviewing them at regular life milestones.

I have just spent the afternoon doing my Emergency Checklist. Quite satisfying in a way. I am now comfortable if one of us dies, that I am sure everything is in the right place, we’ll each have more than enough money to survive on etc. We’ll still be able to have holidays but maybe not save as good a percentage as we do today. But that’s fine. All being well, the survivor of us, still wont be worrying about a Safe Withdrawal Rate (SWR), whether it should be 3 or 4%. My Dad, a keen sailor, used to say DVWP – God willing, weather permitting. In our case I think it should be DVIP – God willing, Inflation permitting. Thirty years is a long way to look ahead. (For the non latin scholars – DV is Deus Volent)

As I worked my way through this, I remembered reading an article quite a while ago, about making sure your partner knows where all the money is, and is comfortable using all the online systems to pay bills etc. One lady I know would not have a clue how to do any online banking if her partner became disabled, because ‘he does all of that….’

A post for another day