Life is full of changes and events, where some are easier to navigate through than others. Life changes can bring new financial needs. However, you may not recognize which events can have a big impact on your ability to save and plan. For that reason, your financial plan is a living document that should always reflect your current situation and standard of living. In other words, it should be continually edited and updated as your life changes.
Generally speaking, you should review your plan once a year. However, when a significant life event like any of the following occurs, it’s a good idea to revisit and revise your plan. Doing so helps to ensure your lifestyle and income stay aligned and that you don’t miss out on your goals.
Getting married or remarried
A new marriage is the ideal time to combine and update your financial plan and prepare in advance for change. Between retitling accounts, assets and real property, revising your estate plans, and looking at your financial goals and risk tolerance based on your views as a couple, there’s a lot to think about.
Establishing a successful life with your spouse should include financial planning and setting shared financial goals for the future, so you start your married life on the right foot.
A personal health crisis
Major disability and long-term illness aren’t as uncommon as you may think and can happen at any time. You may also be faced with caring for a loved one, like a parent or spouse, who has a debilitating health issue. Even if you’re healthy, it makes sense to plan for the effect of a health change on your finances. This includes having contingencies in place if you need to take unpaid time off work, like building an emergency fund or buying disability income insurance, and also organizing your power of attorney(s) and other directives that help ensure your financial affairs and healthcare decisions are properly managed if you’re no longer able to do so yourself.
Wealth changes
A new job or a substantial pay hike, a severance package, an inheritance or the proceeds from a business sale – significant changes in income warrant a reassessment of your financial plan. Understanding and effectively navigating the complex financial issues associated with wealth changes can be extremely beneficial.
I can provide the guidance you may be looking for to weather the change. Do you need to adjust your spending habits? What taxes will you have to pay? How will you manage your savings strategy? These are just some of the questions we can tackle so that a sudden change in your finances doesn’t throw you off track long term.
Retirement
Retirement may be the most important transition in your life. Ahead of this milestone, it’s crucial to take an honest look at your current financial situation, goals, and what you need to do to set yourself up for the retirement you want. If you’re in your 50s with a goal to retire in 10 to 15 years, now is the time to get serious about mapping out your financial life post-work. It’s when you should be thinking about how you plan to replace the income you’ve been generating from working and potentially shifting your investment strategy to fit your life stage.
Talk to us about it
Your life may not follow the path outlined in the above scenarios, but we all experience life changes. Part of proper financial planning is being ready for the “what ifs”. When you experience a life transition, please let me know – we can work together to help you through major challenges and adjust your financial plan so that it continues to meet your needs and goals. Call our office today to review your financial plan.