“That’s never happened here before.”
“I didn’t think it would happen to me.”
These are often the sentiments expressed by people who are suddenly affected by a natural disaster. Weather disasters—like wildfires and earthquakes in the West, floods and tornadoes in the Midwest, pounding rain, paralyzing snow and bitter cold from winter storms in the Northeast, and hurricanes in the South—can all be financially devastating.
In 2018, the economic cost of natural disasters in the United States totaled $91 billion, according to the National Centers for Environmental Information.1 As we reflect on the weather disasters that have already occurred in 2019, the importance of being financially prepared becomes even more commonplace and critical. While you can’t predict when a natural disaster is going to strike, you should assume that one will strike in your area eventually. So, what should you do to be ready?
Keep key financial records (bank statements and other financial accounts, estate plans, taxes, property, insurance and personal documents) in a waterproof and fireproof safe. A file drawer is not going to protect these records during a flood or fire.
Electronic records should be copied onto an external hard drive or a thumb drive that is stored in the safe as well. You can also keep backups in a remote cloud storage. Here are some ways you can keep your digital data and accounts safe.
When you’re dealing with an unexpected emergency, it can be a lifesaver to have liquid assets available in an easy-to-access account, like a savings or money market account. It’s likely that you will need to cover short-term expenses for things like an extended hotel stay or living expenses if you are evacuated from your home. We recommend that all families have an emergency fund that covers 2-6 months of living expenses. (This amount should be higher for single-income families). Take a look at our My Spending Plan report to learn more.
Keep some cash in your safe since it may be difficult to access in the short-term while power is out or ATMs aren’t accessible, especially in a variety of bill denominations to cover smaller expenses as well as larger ones.
While reviewing your insurance policies may not sound like the most fun, you don’t want to find out what your insurance policies cover after a natural disaster. For example, if a hurricane created water damage from a flood, it may not be covered by standard homeowner’s policy. A specific flood policy may be required to cover the water damage. Did you know that if you live in California, most homeowner insurance policies do not cover damages from an earthquake?
Review all terms of the policy for specifics. Is the replacement cost of your home covered or just a specified dollar amount? Are your vehicles and other personal property covered? Do you need specialized coverage (for example, wind or mudslide damage)? Listen to our podcast episode titled Insurance Policies and What You Need to Know to learn more. Your advisor can help you conduct a review of your insurance policies and determine any potential gaps in coverage.
Knowing you are financially prepared for a natural disaster can help ease the burden of recovering from one when it does happen. Talk to your advisor about how we can help you organize your financial records and prepare for emergencies so that you feel confident in handling any potential natural disasters.
1 “2018’s Billion Dollar Disasters in Context,” climate.gov, National Oceanic and Atmospheric Administration, 2/7/19.
Mercer Advisors Inc. is the parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate, but is not guaranteed or warranted by Mercer Advisors. Content, research, tools, and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors. Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy or product made reference to directly or indirectly, will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark. This document may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to market conditions. Readers are cautioned not to place undue reliance on these forward-looking statements. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Mercer Advisors’ control. Mercer Advisors is not a law firm and does not provide legal advice to clients. All estate planning documentation preparation and other legal advice is provided through its affiliation with Advanced Services Law Group, Inc.
You are leaving the Mercer Global Advisors website and will be redirected to the Science of Economic Freedom (SOEF) website. SOEF is brought to you by Mercer Advisors Inc., the parent company of Mercer Global Advisors Inc., and is not involved with investment services. Mercer Global Advisors Inc. is an SEC-registered investment adviser headquartered in Denver, CO.
The Science of Economic Freedom website should not be construed by any consumer and/or prospective client as Mercer Advisors’ solicitation to effect, or attempt to effect, transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Furthermore, information on the SOEF website should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from Mercer Advisors.