50 Shades of Risk

Jonathan Clements

WHAT’S THE BIGGEST financial risk we face? Today, many folks would point to the possibility of a recession, a stock market plunge and perhaps both. Indeed, those are perennial perils—but perhaps they shouldn’t be our biggest worries. Looking to lose sleep? Here are 50 other dangers we face:

  1. Really, really long-term care.
  2. Your financial advisor turns out to be a crook.
  3. Your spouse leaves.
  4. Double-digit inflation.
  5. Your new neighbor specializes in personal-injury lawsuits.
  6. Your son just got his driver’s license.
  7. Your fellow fund shareholders panic and sell en masse.
  8. Your employer is the 2019 version of Enron.
  9. Social Security benefits get slashed.
  10. Your children are ages two, three and five—and your spouse dies.
  11. Your financial accounts are hacked and emptied.
  12. Your home’s foundation is sinking—fast.
  13. It turns out he wasn’t the next Warren Buffett.
  14. Your retired parents run out of money.
  15. Your 42-year-old is still living in the basement.
  16. Your job can be done cheaper and faster—by someone else.
  17. You were about to put your home on the market, but piping plovers took up residence on your front lawn.
  18. The 4% rule doesn’t work.
  19. When you’re out of town, your high schooler throws a wild, booze-fueled party—and somebody gets injured.
  20. A disability prevents you from ever working again.
  21. Congress decides to tax Roth accounts.
  22. Your insurer jacks up premiums on your long-term-care insurance to an unaffordable level.
  23. You lend money to your sketchy cousin, and it seems he’s even sketchier than you thought.
  24. Your 20-something kid gets seriously ill—and hadn’t bothered to buy health insurance.
  25. It’s been years and your cash-value life insurance still doesn’t have much cash value.
  26. Self-employment proves to be a bust.
  27. Your life’s savings went into rental properties—and the properties attracted a string of deadbeat tenants.
  28. Your child has a medical condition that means she’ll always need financial support.
  29. The U.S. electrical grid is hacked.
  30. Your new boss takes an instant dislike to you.
  31. We discover the economy won’t function if everybody keeps retiring at 62.
  32. You become a grandparent—when your daughter is 15.
  33. You belatedly find out about your spouse’s gambling addiction.
  34. U.S. stock prices don’t just plunge. They also stay down for three decades—just like Japan’s.
  35. Your elderly parents are scammed out of the inheritance you were counting on.
  36. The biggest local employer collapses—and so do local property prices.
  37. Your father leaves everything to his children, which is when you learn you have three half-siblings.
  38. Vanguard Group decides to become a for-profit company.
  39. Medicare’s funding problems finally catch up with it.
  40. Your brokerage firm has a massive computer failure—and all account records are obliterated.
  41. It turns out Treasurys aren’t the world’s safest investment.
  42. Your kid takes out hefty college loans—but never graduates.
  43. The index-fund naysayers turn out to be right.
  44. Termites, cockroaches and mice.
  45. Your 10-year-old likes to cook—when nobody else is at home.
  46. You should have invested in canned goods.
  47. Your employer finds out about that thing you did in high school.
  48. Deflation.
  49. Your neighbors tear down their house and build a monstrosity.
  50. That gloom-and-doom financial prophet who’s been getting it wrong for decades? He’s finally right.

Follow Jonathan on Twitter @ClementsMoney and on Facebook. His most recent articles include Show Me the Money, Timely Reminder and Declaring Victory. Jonathan’s latest books: From Here to Financial Happiness and How to Think About Money.

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Mr Moderate
Mr Moderate
3 years ago

Good one to read on Halloween.

Langston Holland
Langston Holland
3 years ago

Dick’s Grumpy Cat “live in a cave with wifi” comment got me thinking about all these risks we have that were completely foreign to most people until recently.

One way to look into our regress is with systematic (market) vs. unsystematic (individual company) risk. You can diversify virtually all unsystematic risk away through the use of index funds (and other, more complicated and expensive methods), such that the only problem you have left is with the entire market or economy.

What have we done as we’ve become rich in both wealth and control over our lives? We’ve cast aside the communities and common moral structures that greatly lessened the impact of unsystematic events in our lives via the support of those around us. We humans seem to have a taste for independence from our neighbors when no longer needed. This is not wise. It reminds me of Israel in the Old Testament forgetting how they achieved their success (God) when they became affluent.

It seems that we need to become well heeled or well loved or both. 🙂

3 years ago

Trying to cheer us us, Jonathan?

Mik Barbasol
Mik Barbasol
3 years ago

51. Socialists finally get elected…oh wait, they already have.

3 years ago

Wow, what a list. I laughed and then i thought what if……and now I won’t be able to sleep well tonight

Jim Kleinbrook
Jim Kleinbrook
3 years ago

work for cnn much ?

Sunil Sharma
Sunil Sharma
3 years ago

I have a comment related to risk number 40. All brokerages and mutual fund companies use an outside custodian firm to hold the assets. What can go wrong at the custodian firm? How serious is this ‘custodian risk’ and risk number 40? How can an individual investor reduce custodian risk and risk number 40? Would it help to split one’s financial assets across multiple brokerages and mutual fund firms in order to reduce these risks? Thanks.

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