When most people think about retirement, they imagine one thing — building up that nest egg in their retirement account. But true retirement security doesn’t rest on a single pillar. It’s more like a three-legged stool: investments, insurance, and savings. If one leg is weak or missing, the whole thing wobbles.
Financial planner Art Stein often sees this imbalance firsthand. “You can’t pour everything into your retirement account and ignore the rest of your financial life,” he warns. Saving is critical, but so is protecting what you already have — and preparing for life’s surprises.
The Overlooked Pillar: Insurance
Take life insurance, for instance. Art recalls meeting a young federal employee in his 30s — three kids, a stay-at-home spouse, and only one year’s salary in life insurance coverage. “That’s not protection,” Art told him. “That’s a temporary patch.”
He explained that while it’s smart to contribute enough to your retirement plan to get the employer match, it’s even smarter to balance those contributions with essential coverage. “If you need to trim your savings rate a bit to buy adequate life insurance, do it,” he advised. “It’s about protecting your family’s future, not just your balance sheet.”
Insurance isn’t anyone’s favorite topic — no one loves paying premiums — but the peace of mind it buys can be priceless. The same applies to disability coverage. While federal employees have a basic safety net, it often replaces only a portion of their income and comes with limitations. Supplemental coverage can raise that protection to 80% of earnings, which can make the difference between stability and struggle after an accident or illness.
Hidden Risks at Home and on the Road
Another area people neglect is liability insurance — the kind that protects you if something goes terribly wrong. Imagine driving on a sunny day when a bee flies through the window, you swerve, and collide with another car. The other driver, a high-earning professional, is seriously injured and can’t work again. Your regular auto insurance might cover $250,000 in damages — but what if the lawsuit totals millions?
That’s where umbrella insurance comes in. For a few hundred dollars a year, you can add $1 million or more in extra protection. It’s one of the cheapest ways to safeguard your financial life. The same goes for accidents that could happen on your property — like a neighborhood child getting hurt during a playdate. It’s rare, but if it happens, the cost could be devastating.
The Second Leg: Your Safety Net
Beyond insurance, every household needs an emergency fund — a financial cushion that keeps you from raiding your retirement savings when life gets unpredictable.
Art recommends setting aside at least three months of expenses, and ideally six to twelve. That might sound like a lot, but it’s not just for crises like job loss or medical emergencies. It can also cover happy surprises — a wedding, a big family trip, or helping a child with college expenses.
The key is flexibility. When markets drop, as they did in 2022, having cash on hand can prevent you from selling investments at a loss just to pay for an unexpected expense.
The Cost of Everyday Protection
Even everyday expenses like car and home insurance have become far more complex and expensive. Cars are packed with sensors and electronics, turning even a simple fender bender into a costly repair. Replacing a bumper or a side mirror now comes with a hefty price tag.
Homeowners are seeing the same trend. Weather events, aging infrastructure, and rising repair costs have driven premiums higher nationwide. Some homeowners try to save by cutting coverage or skipping flood and wind insurance — a risky gamble.
Art emphasizes that insurance companies aren’t raising rates because they can; they’re doing it because the claims are larger and more frequent. “People shop based on premiums,” he says, “but that’s the wrong approach. Cheap coverage often means weak coverage. You don’t realize the difference until you need it.”
When reviewing your policy, look for guaranteed replacement cost — coverage that promises to rebuild your home no matter what it costs, not just what it was once worth. That difference can determine whether you rebuild or go broke trying.
The Third Leg: Flexibility and Realism
Even with solid savings and good insurance, life throws curveballs. If a fire destroys your home, the insurance payout doesn’t arrive overnight. Rebuilding can take a year or two. That’s why it’s critical to have coverage for temporary living expenses — so you’re not paying rent and a mortgage at the same time while waiting to move back.
Retirement planning, at its core, is about balance. You need savings for the future, insurance for protection, and cash for the unexpected. Neglect any one of these, and your plan becomes unstable.
Art’s message is simple but powerful: “It’s not about how much you save in one account — it’s about how well you protect your entire financial life. The strongest retirement plan is the one that stands steady on all three legs.”
