Seemingly Successful Families May Be at Risk

Many are leaving themselves vulnerable to risks that may stand in the way of achieving their ideal retirement or may jeopardize their family’s financial future.

By Ayo Mseka

About half of Americans (47 percent) say that if they were to lose their primary source of income tomorrow, they could only maintain their current lifestyle for three months or less.

A study that was commissioned by the Million Dollar Round Table and conducted online by Harris Poll of over 2,000 U.S. adults ages 18 and older finds that many Americans, even those who are considered financially successful, do not account for unexpected risks during their financial planning.

Planning for the unknown

It appears as if many American households are unprepared in the event of something unexpected happening to a family member, thus losing a primary source of income. A majority of Americans (61 percent) say their family would assume debt if they passed away tomorrow, with 38 percent of U.S. adults saying that the debt would be $10,000 or more. Additionally, only half of Americans (50 percent) have life insurance. Of those who have any dependents, 47 percent say their dependents would run out of money without their personal income in two years or less if they were to pass away tomorrow.

“While these families with a steady source of income may seem prepared, they are jeopardizing it all by not having the right protection to ensure future financial security for themselves and their families,” said Mark J. Hanna, CLU, ChFC, MDRT President.

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Only half of Americans (50 percent) have life insurance.

Americans are also not taking in to account the possibility of disability or illness while planning for their financial future. One in 20 Americans (five percent) are unemployed and unable to work because of disability or illness, but only 20 percent of U.S. adults have either short-term and/or long-term disability income insurance. Of those Americans who do have DI insurance, only 39 percent believe it would be enough to cover their long-termcare and medical expenses if they were to have an accident.

On average, Americans say their household has two sources of income, with 40 percent having an annual income of $74,000 or more. “It’s not just lower-income Americans who are vulnerable to financial strain in the event of a life-altering incident; families considered financially successful are also at risk,” added Hanna. “A financial professional can help identify potential risks and work with you to set up a plan that protects your family from these pitfalls.”

Of the Americans surveyed:

• 70 percent have received some college education, are graduates or have a higher degree.

• 62 percent are currently employed.

• 67 percent are homeowners.

• 80 percent have medical insurance.

• 56 percent are parents.

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Only 36 percent of parents with children under the age of 18 in their household are saving for their children’s college education.

Saving for college

College expenses are rising more quickly than inflation; yet, only 36 percent of parents with children under the age of 18 in their household are saving for their children’s college education. Lack of college savings may be a result of many Americans still working to pay off their own student loan debt. According to the Quarterly Report on Household Credit and Debt from the Federal Reserve Bank of New York, Americans currently owe $1.31 trillion in student loan debt.1

The MDRT survey was conducted online within the United States by Harris Poll on behalf of MDRT from January 9–11, 2017, among 2,192 adults ages 18 and older.

1 Federal Reserve Bank of New York, Quarterly Report on Household Credit and Debt