Let’s say you are 36 years old and feel like you have everything you want.

You graduated from college with a nursing degree and enjoyed the uncomplicated life of a single woman in her twenties. You saw the world and utilized your skills at the Red Cross. You met and married a wonderful man and have a one-year-old daughter. Life is good. One evening, your world is rocked to the core. Your husband is gone, taken by a massive heart attack.

This is the story of my parents, who never planned for the possibility that one of them would die at a young age. That was a mistake – one that would make life challenging for a sudden widow and single parent of a young child. There was no life insurance, no 401(k), no investments, or real savings. My mother’s only saving grace was her career.

To say that watching my mother struggle influenced my life is an understatement. In addition to gifting me a strong work ethic, the experience led me to choose a career helping others plan for a secure financial future. One never knows what obstacles life may throw your way. I’d like to share five tips and strategies for young parents to avoid finding themselves in my mother’s shoes.

1. Have an emergency fund

I implore you to do this. Don’t think of these funds as back-up, when money is a little tight, or worse, a pot to fund your next vacation. As a general standard, everyone should have three to nine months of living expenses set aside in a safe account, preferably interest-bearing.  Exactly how much depends on your circumstances; that is, if you are a single paycheck household, work in a field with cyclical employment or potential layoffs, or are married with dual incomes.

2. Make sure you have a last will and testament

If you’re under age 50, you may think estate planning is for older people with money. However, everyone should at least have a will. For young parents, you must have a will because that document states your wishes as to who will serve as guardian for your children in the event both parents are deceased. Selecting a guardian is a personal and potentially complex decision that should be contemplated together. Otherwise, the courts will decide.  It wasn’t until my father’s passing that my mother realized how critically important a will was. If something happened to her, where and with whom would I live?

3. Buy life insurance

This is essential for young families, because the loss of an income is one of the most catastrophic financial risks. The amount of coverage to seek varies based on each family’s situation and goals. According to Dan Sullivan, an attorney and director at First Element Insurance Planners, “a simple baseline would be to purchase an amount that, when invested conservatively, could provide a monthly or annual income stream equal to the net income lost for the remaining years your spouse would have worked, or at least until children are no longer dependent on their parents.” Take the time to complete a needs analysis incorporating not only lost income, but also potentially paying off a mortgage or providing for education.

When it comes to obtaining life insurance, don’t let fears over cost dissuade you. There are options that provide coverage for a period of 10, 20, or 30 years for less than a household’s mobile phone bill. Check whether your employer offers life insurance as part of their benefits package, as group life insurance is often less expensive.

The younger you are when buying a policy, the cheaper the cost. This is because any substantial amount of life insurance requires medical underwriting, and the older you are, the greater the odds you’ll develop a health issue that could impact your ability to qualify for coverage at a reasonable cost. If you already have a pre-existing condition, don’t give up. Another benefit to group life insurance purchased through your employer is that you can often purchase some amount of coverage without medical underwriting. Often, professional associations offer group life insurance plans for their members.

4. Understand your health insurance plan

Do you know how you would maintain health insurance coverage if the policy was held by the deceased spouse? Under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), employers with 20 or more employees are required to provide temporary continuation of group health coverage in the event of the covered employee’s death. For a surviving spouse and dependent children, coverage can be continued for 36 months. If you purchase private health insurance, check with a licensed professional to ensure you don’t miss out on support your family may be qualified to receive through state or federal subsidies.

5. Know the Social Security benefits available to you

Social Security is not just for retirees; it also provides benefits to survivors and dependents. This was a key lifeline for my mother. Widows or widowers caring for a child under the age of 16 are entitled to benefits if their spouse had enough work history to qualify. Generally, Social Security requires 40 credits (10 years of work) to be eligible for benefits but there are exceptions for younger people. In addition, minor children are entitled to their own benefit until they turn 18 (or 19 if attending school full time). You can obtain an estimate of your benefits anytime by calling the Social Security Administration or by reviewing your benefits statement online through the My Social Security website at www.ssa.gov.

         Bonus: The legacy of peace of mind

No one likes to contemplate death, and when children are involved, it can be that much more difficult to imagine the many ways your life and theirs might be impacted. Taking these five steps can bring comfort and peace of mind during a time of deep emotional pain due to loss. Ensuring space to grieve without anxiety and fear about money is truly one of the greatest gifts one can leave.

If you have questions about how to plan for the future of your family in the case of an untimely death, we would be happy to schedule a quick conversation.

About the author

As a wealth advisor with Buckingham Strategic Wealth, Emilie has a passion for educating clients and giving them a sense of empowerment and peace of mind about their financial decisions. She works in partnership with her clients to gain a thorough understanding of their values and objectives to craft holistic financial plans designed around each client’s unique situation. Emilie leverages her education to see the plan through by integrating tax-efficient strategies, risk management and estate planning techniques. She is also an active member of the St. Louis Community and serves on the board of the National Council of Jewish Women, St. Louis, and Camp Rainbow Foundation.

This content is for informational and educational purposes only.