To gauge the effectiveness of your financial planning to date, take this quiz to check your family’s financial health.
Add up the points based on your responses to each question, and then check the scorecard at the end of the column to see where you stand.
1. Do you and your wife each have a will?
Take 1 point for each spouse that has a will.
2. Does your family have a budget that you follow each month?
Take 2 points for yes, and 0 for no.
3. Do you and your wife each have durable medical powers of attorney?
Take 1 point for each spouse that has such a document.
4. Are all working spouses maximizing their contributions to any company-sponsored retirement plans?
Or, if you are self-employed, are you making maximum contributions to your IRA, SEP or Keogh plan?
Take 1 point for each spouse.
5. If you are currently employed and have children who are not yet in college, do you and your wife have life insurance on the lives of all working spouses equal to 10 times each income?
Take 2 points for yes and 0 for no.
6. Does your family have an outstanding credit card balance?
If no, take 3 points.
If yes, and it is over 10 percent of your combined pre-tax annual income, take -2.
If yes, and it is between 5 percent and 9.9 percent of your pre-tax annual income, take -1.
If it is less than 5 percent take 0.
7. How much does your family spend for housing expenses? (Mortgage or rent plus utilities, upkeep, etc.)
If the total is more than 25 percent of your combined pre-tax income, take -1.
If the total is between 15 percent and 24.9 percent, take 0.
If it is less than 15 percent, take 1 point.
8. If you are still employed, what is the percentage of your family’s total savings rate divided by your total family pre-tax income?
Total savings should include contributions to qualified plans, Sec. 529 plans, plus personal savings.
For greater than 10 percent, take 2 points.
For between 5 percent and 10 percent, take 1 point.
Take 0 if less than 5 percent.
If you are retired, take 1 point if you are saving regularly each month.
9. If you are still working, do you have disability insurance coverage, either provided by your employer, or purchased by you, that provides at least two-thirds of your current income?
If yes, take 1 point, if no, take 0.
10. If you own or are purchasing your home, do you have a personal umbrella liability policy over and above the limits in your automobile and homeowner policies?
If yes, take 1 point; if no, take 0.
11. Does your family have an emergency fund accumulated that is at least equal to at least 3 months of income?
If yes, take 2 points, if no, take 0.
12. Have you reviewed your automobile and homeowners’ insurance coverage with your agent in the past 12 months?
Take 1 point for yes, 0 for no.
13. Regarding your “retirement fund” (whatever that may be), have you spoken with your financial adviser to match your risk tolerance with the types of investments that comprise your fund?
Take 1 points for yes, 0 for no.
14. If you are over 50, have you projected how much retirement income you are on target to receive when you retire?
Take 2 points for yes, 0 for no.
15. If you and your wife are over 50, do you each own a long-term care insurance policy that provides at least $3000 of monthly coverage?
Take 2 points for yes, 0 for no.
20-25 points: Congratulations, your financial health is excellent
15-19 points: Your financial health is good
10-14 points: Your financial health is fair
5-9 points: Your financial health needs immediate attention
Got a financial planning question for Greg? You may email him at firstname.lastname@example.org.
Greg Roberts is a certified financial planner with 35 years of financial and estate planning experience.
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