Time to Prepare – Monterey Herald
I just read a book called “One Second After” by William Forstchen. It’s not a new book, but I found it very stimulating, especially in my role as a financial planner. Let me warn you up front: this is the kind of book that can give you nightmares, but in a good way, especially if it gets you thinking about how to prepare for disasters.
The book is the fictional tale of a small town in western North Carolina that deals with the aftermath of an electromagnetic pulse (EMP) attack on the United States. Without going into detail, an EMP attack involves detonating a nuclear warhead high above the earth’s surface. The resulting electromagnetic pulse would be devastating. In a fraction of a second, an EMP would wipe out all electronic circuitry and render almost any electrical device we rely on useless. We would literally be back in the dark ages. It is not pleasant to think about it.
We don’t have to go through something as extreme as an EMP attack to see our lives turned upside down by forces beyond our control. The potential for catastrophic events is with us every day. For example, forest fires and earthquakes are serious threats. Thorough preparation now can help us stay lucid and able to act in times of disaster. Here are some simple steps you can take to protect yourself, your family, and your financial life if you face a worst-case scenario.
First, know what to do during an evacuation. Create an evacuation checklist that includes a list of the items you want to take and where they are. You should also have an escape plan detailing where your family is to meet and how you will try to communicate if you separate. You can also pack a “take-out bag” of items you might need, such as a change of clothes, a jacket, a flashlight with batteries, water, and energy bars. Keep your go-bag accessible and up to date. Expired or corroded batteries and moldy energy bars will be of no use to you in a disaster.
Second, create an emergency file with the information you would need if you were to leave your home. Include copies of your marital status records along with proof of medical insurance, financial information, medical information, and contact details of friends, family, doctors, financial institutions, and employers.
Vital records include copies of birth certificates, adoption certificates, marriage certificates, passports, driver’s licenses, property deeds, leases, titles and insurance policies.
Financial information includes a list of bank account numbers, investment account numbers, front and back copies of credit cards, and retirement account information. You should also include information about debts, such as mortgages and overdue credit card balances.
Your best bet for keeping this information secure, yet accessible, is to get yourself a small fireproof safe. Look for one that is UL rated “350-1 hour” or better, which means it’s designed to keep the internal temperature below 350 degrees for at least an hour.
In addition to physical documents, it is a good idea to scan these documents and store them securely in cloud-based storage like DropBox or an electronic safe. Check with your financial advisor to see if they offer an electronic safe. If that’s not an option for you, a small USB drive will work, although security might be an issue. If you are using a USB flash drive, be sure to password protect your documents.
Finally, take a close look at your home insurance policy. Home values have increased dramatically over the past few years. If your insured amount does not reflect the increase in market values in your neighborhood, you could be underinsured. Many home insurance policies are now written for “additional replacement costs,” which means the policy will pay up to 120% of the home’s insured value. Check with a contractor to see what it would cost to rebuild your home and, if necessary, increase your coverage to that amount.
Steven C. Merrell is a partner at Monterey Private Wealth Inc., an independent wealth management firm in Monterey. He accepts any questions you may have regarding investments, taxes, retirement, or estate planning. Send your questions to: Steve Merrell, 2340 Garden Road Suite 202, Monterey, CA 93940 or email them to [email protected].