Nurse, Is your 401(k) protected?

When you play team sports you must have a solid defense in order to win and very often mention it seems that it is the power and abilities of the defense that wins a team a championship.

If your offense is great and scores lots of points you are on a great path towards winning unless your defense is terrible and the other team scores even more points.

Financial planning is not that much different and for many people and for many families’ defense has won them the ability to continue to function and defense has given them the ability for their loved ones to continue on with a life full of hope and promise.

When talking about defense within your financial plan we are not talking about being super conservative with the investment portfolio and we not talking about leaving money under the mattress for a rainy day.


What we often see when we meet with new clients is that there is a great lack of planning around their protection.

Very often the lack of protection planning has occurred due to lack of education around how to position and pay for the protection products and sometimes the lack of planning has just been put on the side due to a feeling that it is not as important as building wealth within investment portfolios.

So why is it that we mention that having the right protection portfolio in place is so important?

Let’s take a look at a hypothetical example. 

One that shows how having adequate and correctly positioned protection in place will help an individual build a strong long term investment.

Nurse Eileen works as a Registered Nurse at her local hospital and she participates in the company sponsored 401(k) plan where she currently puts away 10% of her income.  She has been working as an RN for 5 years and really enjoys her job. Eileen is married and has a 3-year-old son.

Nurse Eileen keep putting away her 401k contributions through salary deferrals and her account grows and grows.  10 years before retirement Eileen gets into a car accident and she is unable to continue working at the hospital and ends up being out of work for 3 years. If Eileen had no income protection in place she would have to start spending money from her 401(k) and thereby limits the growth of the portfolio but with an adequate Disability Income policy in place Eileen replaces most of her income while she is injured and unable to work and she even gets money put away for retirement through that plan so that she has enough money once she reaches retirement.  Nurse Eileens ability to keep getting paycheck is the most important part of her financial plan as the paychecks funds her 401(k), pays for her mortgage and puts money aside for her son’s college fund.  Due to the disabling injury those paychecks stops unless adequate protection has been put in place.

Not only does Eileen receive tax free income through her policy but she also allows the 401(k) to stay invested and grow to a larger number that it would have if had to pull out money.

Written by CreativeNurse Team

2016-29502  Exp. 10/17