What would be hard to replace

In February 1735, Benjamin Franklin’s Pennsylvania Gazette printed a short letter on protecting Philadelphia from fire, signed “A. A.”. The editors of The Papers of Benjamin Franklin attribute it to Franklin himself. The letter opens with plain, practical advice, such as not carrying live coals from room to room in an open shovel and keeping chimneys properly swept, and backs it up with a line people still quote today: “…as an Ounce of Prevention is worth a Pound of Cure…”

Franklin was writing about fire, not insurance or pensions, yet the idea carries over to personal finances. Before a retirement plan grows, it is worth looking at what will have to carry it. For most people in work, that is their income. It pays the rent and everyday costs, and it pays the monthly savings too. If it stops for any length of time, the savings rate is rarely the only thing at risk. More often the whole plan starts to wobble.

That is why, in the CapitalPath approach (see “My approach”), “Protect” comes before “Build”. What would be hard to replace: health, income, family? This is not a call to take out every policy imaginable. It is simply a sensible order of questions. Once it is clear which risks could genuinely knock a plan over, it becomes easier to decide calmly how much goes into building savings, and how much commitment you can carry. How occupational disability differs from illness, temporary inability to work or the state reduced earning capacity pension is explained on the CapitalPath disability income protection page.

Malte is 36, a self-employed physiotherapist with his own practice, and from next month he wants to start putting aside €160 a month for later (an illustration, not a calculation for you). Three savings plan offers are on the table. He is comparing charges and terms, and the decision feels close.

As he works through the numbers, something else occurs to him. The €160 comes from work he does with his hands. If an injury kept him out of the practice for months, the rent, the lease on his equipment and the savings plan would all keep running, but his income would not. What would be covered in that case by the state, by private cover or not at all, he honestly doesn’t know.

So the evening ends with neither a policy nor a savings plan. Malte puts the three offers aside and starts a different list. What would replace my income if I couldn’t work for a long time? What is already in place, and what am I only assuming? And how much can I realistically save each month once those questions are answered?