By Lewis J. Walker, CFP®
In his hit song, "1999," Prince sang, "Yeah, they say two thousand zero zero, Party over, oops out of time, So tonight I'm gonna party like it's 1999.'' As we approached 2000, the last year of the second millennium, do you remember the spreading fear over Y2K? Dr. Ed Yardeni, the highly respected Managing Director & Chief Economist, Deutche Bank, in a Bank for International Settlements keynote address predicted, "Let's stop pretending that Y2K isn't a major threat to our way of life. There is too much at stake for such uninformed wishful thinking."
In March, 1999, London's The Times intoned, "Suddenly, those individuals who have insisted that they will be withdrawing their cash from the bank before the end of the year do not seem quite so misguided. The prospect of the millennium bug eating your savings may be more than just the nightmare of overactive imaginations. At a high-powered millennium meeting in Washington recently, delegates were stunned to hear Henry Kissinger announce that he intended to withdraw all his money from the bank as 2000 nears."
What is startling about the worry and panic over what turned out to be a non-event, is that it was 15 years ago! I remember anxiety about what could happen to banks and the financial system, and then with relief just past midnight that New Year's eve, proclaiming, "Hey, the lights are on!" And we rocked on like it was still 1999!
As we approach 2016 and the making of resolutions, perhaps we should extend our resolve further out, beyond the immediate year. Remembering Y2K is a useful construct. We think, "Wow, that was fifteen years ago. Time really flew past us." And the next 15 years will fly by just as fast!
The second lesson of Y2K is that most likely 99% of what you worry about today will not materialize. But something else will!
Consider how old you are today. How old will you be in 15 years? How old will your spouse be? Other loved ones like a son or daughter, your parents, father- or mother-in-law, grandchildren, grandparents, dear friend? How does your personal age wave influence financial decisions? What challenges do you see-positive and negative-that will result in a need for capital or other resources? How does taking care of yourself and those who depend on you today, or may do so in the future, planned or unplanned, impact your financial decisions?
How do your family's life transitions timelines impact your savings rate, your investment and risk profile, debt levels, tax strategies, and career or retirement decisions? You know there will be "what if" events in your life and that of those you love and care for, the unexpected that comes out of the woodwork. How long has it been since you reviewed your insurance portfolio life, health, disability, long term care, property and casualty? Are liability limits appropriate to your earning power and net worth? Do you carry Umbrella Liability coverage? If you are a business owner, do you have a continuity and succession plan in place?
Have you reviewed your will, powers of attorney for assets and healthcare, advance directive? If you don't have such documents, or they are more than ten years old, that's New Year's resolution #1! Do you have an old will that you never revoked that benefits someone no longer in your life, like, say, an ex-spouse? Yes, that happens!
When is the last time you reviewed the beneficiary designations on retirement plans, other investments, insurance policies or annuity contacts? Do you have trust provisions in old wills that no longer are valid, such as benefiting children now grown? Do you have loved ones who due to incapacity or other impairment should be provided for within well-crafted trust provisions?
In 1999, 2016 seemed like a faraway eternity. How old will you be in 2031? How old will those you love and care for be? What does future from here to then look like? How does that vision impact resolutions made today?
Prince sang on, "But life is just a party, and parties weren't meant to last..." Everything changes, we just don't know what changes may come. lt's called planning for contingencies. But recall Honest Abe Lincoln's advice: "The best way to predict your future is to create it!" Happy New Year! - The Coach.
Lewis Walker is President of Walker Capital Management, LLC. Securities and advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative and investment adviser representative of SFA which is otherwise unaffiliated with Walker Capital Management, LLC.