Financial Planning & Life Events

June 1, 2023 | Todd Little, CFP®, AIF®

Although it’s generally recommended that people visit their doctor for an annual checkup, I must confess that I didn’t always heed that advice when I was younger. Thankfully, I’ve been blessed with relatively good health and so far, I have avoided any major repercussions. You can be certain, though, that at those times when something major was going on – if I was dealing with an illness or injury – I quickly made an appointment to go see my doctor.

Financially, we see a similar pattern for many people. While there is a significant benefit to seeing your financial advisor each year for an annual checkup, what often prompts people to meet with their advisor – or seek one out for the first time – are major life events. 

There are many events that may warrant a discussion with your financial advisor, but we will focus today on just a few of the more important ones: marriage; remarriage; divorce; birth or adoption; job change; and death of a spouse/significant other.

  • Before I address some of the considerations for each of these life events, I want to remind you of five foundational items that every person should consider.

         1) What are my financial values?
        2) What is my current financial situation?
        3) What are my financial goals?
        4) What is my plan to achieve my financial goals?
        5) Do I have a functional budget? (Yes, I believe everyone should have a budget as it is a key component to achieving financial goals. I prefer to call it a
             “spending plan.”)

    If you have those items in place, then often a life event simply causes you to answer the question: “How does this change any of these five financial foundations?” Still, for each life event, I will provide some additional questions to consider with your financial advisor.    

  • What are your shared financial values? Do they align or do you need to work on them together?
  • Do you want to set up a joint account or keep separate accounts? How do you combine your finances?
  • What new goals do you now have? Buying a home? Starting a family?
  • What adjustments do you need to make to your budget?

  • Again, do you want to set up a joint account or keep separate accounts? How do you combine your finances? (It is more common to see a higher level of financial separation in remarriage situations, although there is no right or wrong answer.)?
  • What changes are needed to our legal documents and beneficiaries, especially as they relate to blended families?

  • How do we fairly divide our assets? More than just values, are we rightly considering such things as tax implications and liquidity?
  • What changes do I need to make to my legal documents and beneficiaries?
  • Am I responsible for alimony or child support? If so, how does that affect my budget?

    Birth or Adoption
  • There are many expenses associated with having children, whether by adopting or birth. What adjustments do I need to make to my budget?
  • What are the tax implications? If adopting, are there any additional tax credits or benefits?
  • What new goals do I need to consider? What about education and, specifically, college planning?

    Job Change/Retirement
  • Is there a large payout to consider such as a severance package or vacation buyout?
  • Does my budget need to be changed for an increase or decrease in income?
  • What should I do with any retirement accounts such as a 401(k) or 403(b)?
  • If the job change was not by choice, what are my options? Do I want to consider a career change? Depending on age, is early retirement an option?

    Death of a Spouse/Significant Other
    While all these life events are rife with emotion, clearly the death of a spouse can be an entirely different challenge. We strongly advise working with a financial advisor to help avoid making emotional decisions and to assist with some of the financial issues, so you have the proper time and space to grieve.
  • Is there life insurance in place? If so, how do I claim and handle the payouts?
  • If the other spouse handled the finances, do I know how to access and take over any of those responsibilities? Do I prefer to work with a financial advisor or find a new one? 

Bear in mind, this is not meant to be an exhaustive list, but just some key points to consider. As I get older, and hopefully wiser, I understand the importance of an annual physical. In the same way, the value of meeting with a financial advisor annually is that when one or more of these life events happen it is easier to get on the same page. In fact, a good financial advisor can help by forcing you to consider what you would do before some of these events happen. 

If you or someone you know is experiencing one of these events, please feel free to forward this article. Even more, we’re here to help. We’d love to meet and help make sure a plan is in place to move forward from whatever circumstances you find yourself in. Contact us!