Family Emergency Planning

Does your family have an emergency plan? Emergencies happen when you least expect them. That is why they are called emergencies. You should be prepared for natural disasters as well as human made disasters. Knowing what to do after a disaster, before it occurs, makes all the difference when seconds count.

Some common natural disasters are floods, fires, earthquakes, tornados and hurricanes. Floods, fire, and tornados, nature’s most violent storms can happen anywhere while earthquakes are prevalent only over or near fault-line areas. Hurricanes are severe tropical storms that form over water and bring strong winds, rain, and floods. Lately we have been made aware of the impact of tsunamis as well.

On the man-made side we have biological and chemical attacks, nuclear blasts and radiation threats. Nuclear blasts are explosions with intense light and heat. They bring with them a damaging pressure wave and widespread radioactive fallout that can contaminate the air, water, and ground surfaces for miles around. Radiological dispersion devices (RDD) are the use of explosives to spread radio-active materials over a targeted area.

Then we have the most common of all emergencies, the unforeseen illness, death, or job loss. Let’s not forget the major repairs such as car trouble or a major appliance failure as well as other household repairs that seem to crop up when we least expect them.

While dealing with the natural and man-made disasters that can threaten your very lives, the best plan is to designate a meeting place for your family, in the event that the disaster occurs when you are separated from each other. Pick two places, one near your home and the other away from your neighborhood, in case you can’t get to the home location. Pick a friend or relative who lives out of the area that you can call to let them know you are OK. You can download the Family Preparedness Guide at (www.opm.gov/emergency/PDF/NationalFamilyGuide.pdf)

The more common emergencies are more likely to occur, that is why they are considered ‘common emergencies’. As a retired Financial Planner I have seen families devastated by disaster due to lack of proper planning. In my own life I experienced severe devastation upon the death of my spouse and business partner. This was the major reason I became a Financial Advisor. I hoped that I could help families prepare so they would not be caught off guard in the event of an unexpected occurrence.

While insurance is always an excellent source of funding at these times most often it is not sufficient to cover the entire need. Consider what it would take for you to be able to continue on in the lifestyle you currently enjoy. Don’t buy insurance according to your current need only; inflation is approximately 4% annually so compute that into your planning figures as well.

Oft times families insure only the bread winner but what would happen if the family caregiver died? Would you be able to afford to hire someone to care for the children while you continued to work? What about if your child died? How would that affect your zest for life and work? Too often we fail to evaluate all the possible reasons for, what I call, Contingency Plan Funding. Taking the time now can save you much heartache and stress later.

When looking at ways to invest your resources besides insurance you may want to consider annuities and retirement plans. IRAs, Roth IRAs, and Annuities will allow you to put money aside that, in emergency, you can tap into. IRAs are tax deferred and you pay taxes only on the earnings, while Roth IRAs are taxed up front only. With all of these plans you will face penalties for early withdrawal unless you have certain types of emergencies. However with annuities you incur what is considered a ‘loan’ that you will have to pay back or those penalties will hit you hard when you annuitize.

If you don’t have a Financial Planner, find one! If you need advice as to who to hire to help you review your Contingency Plan contact a friend or trusted advisor. Be sure to interview more than one Financial Planner. Look closely at the fees for service. You need to trust this person completely and to be comfortable with them; you will be working closely with them for many years to come.

© Copyright 2006 Ginger Marks