employment, 32 percent say they are
“very prepared” to handle its financial
impact. Yet only 12 percent of those
who’ve actually been jobless look back
and rate their readiness so highly. A
more common reaction: 44 percent
were angry at themselves for not hav-
ing been better prepared. Overall, half
of those surveyed who had weathered
a life crisis called the financial impact
they experienced “very significant.”
“Let’s face it,” says Richard Hisey,
president of AARP Financial, the
financial-services subsidiary of AARP,
“it’s hard enough to contemplate these
scenarios, let alone plan for them. At
the same time, the reality is: sooner or
later most of us land in crisis. A little
preparation can go a long way.”
So it’s time to plan. Let’s get started.
Job Loss
M YRA PARKER, 52, wasn’t worried when
she lost her job at an insurer in 2002.
She had a severance of $45,000, unemployment benefits, a working spouse,
and a sideline selling prepaid plans
for legal services. But a year later her
husband, Dennis, 65, a truck driver,
was also laid off. “Then we were in
a crunch,” says Myra, who lives in
Chalfont, Pennsylvania. “I had blown
my severance enjoying life and doing
home improvements. My problems
were of my own making.”
MUST DO #1 Imagine the worst Just
as she never guessed Dennis would
be jobless, Myra didn’t think it’d take
years to find adequate full-time work.
“People always think bad things
will never happen to them,” says Peg
Downey, a financial planner in Silver
Spring, Maryland. “It makes our job
really difficult because we come off as
gloom-and-doomers.”
People’s optimism often masks fear,
notes Spencer Sherman, author of The
Cure for Money Madness (Broadway
Books, 2009). “Most of us don’t know
how to look at our money objectively.
What we bring to finances is fear, and
fear makes us impulsive. We make de-
cisions without checking the numbers.
We say, ‘Things will just work out.’”
That makes a gulp-inducing scenario
a useful exercise. Sherman has clients
plan a life with just half their money.
“If you face your worst fears, you won’t
be immobilized by them,” he says. “And
you may surprise yourself. It refocuses
you on what you really value.”
Disability
KIM SHERBURNE was teaching a nursing
class when she realized she’d left something in her car. Running to retrieve it,
she fell on her knee. That was in 1998.
“They did arthroscopic surgery, and
I don’t know if it was an exercise or a
fluke in rehab,” she recalls, “but I developed reflex sympathetic dystrophy.”
say they were
not prepared
financially
say keeping
emotions in check
was a significant
challenge
survey, 26 percent of those thrown out
of work had less than a month’s notice;
another 42 percent had none. And 35
percent of respondents don’t have six
months of expenses set aside, a prudent level for many households.
MUST DO #3 Work your network The
Parkers did this much right: they told
everyone they knew about their plight.
“A lot of people are too proud to tell
anyone, but people can’t help you when
they don’t know you need help,” says
Myra, who picked up some business
through friends, former coworkers,
and members of the church she and
Dennis attend.
Stephen M. Pollan applauds such
openness. “You have to find a way to
harness the emotional energy,” says
Pollan, author of Lifelines for Money
Misfortunes (Wiley, 2007). Life crises
“are emotional explosions that put you
into shock. Other people help you find
a way to clarity and objectivity.”
Myra and Dennis were also smart to
maintain the proper certifications that
would allow them to regain employ-
ment in their chosen fields. Last year,
after five and a half years of underem-
ployment, Myra again found full-time
work selling insurance.
STATIS TICS SOURCE: TELEPHONE SURVE Y OF 1,200 PEOPLE AGES 40–79 CONDUC TED 10/9/2008–11/8/2008; MARGIN OF ERROR +/– 2.8%
call family and
friends their most
trusted source of
financial guidance
say it was hard
to trust the
guidance they
received
