Financial planning is much more than just a series of savings and investments you lock away and forget about. Your money doesn’t exist in a vacuum. Your financial needs are going to evolve in response to the transitions that we all go through as we work, raise our families, and look ahead to retirement.
Managing these major life transitions is one of the keys to maximizing your finances and to achieving a greater Return on Life™ (ROL).
It’s Better to Prepare Than Repair
When it comes to your financial future, it’s easier to prepare for what’s ahead than it is to repair mistakes. With that in mind, we utilize a tool called The $Lifeline. It’s designed to help you prepare for life’s transitions by asking you to anticipate what’s coming up and the age at which you expect each transition to happen.
You can then plot these transitions on your $Lifeline, and use a color-coded system to rate the transition based on whether it is a High, Medium, or Low priority. If you’re married, you and your spouse can plot both shared transitions and transitions that are unique to each of you on the same $Lifeline for a complete big-picture of all the milestones that will affect your household and your finances. Each transition also includes links to additional resources that you can consult for more information.
Let’s take a look at the six $Lifeline categories, and a few of the important transitions we can help you map out and prepare for:
- Expecting a child
- Special family event
- Assistance to a family member
- Child going to college
- Child getting married
- Empty nest
- Concern about an aging parent
- Concern about the health of child
- Concern about the health of spouse
- Family member with disability or illness
- Recent death of a family member
- Create end of life medical directive
- Contemplating career change
- Job re-structuring
- Expand business
- Start a new business
- Acquire / purchase a business
- New job training / education
- Downshift worklife
- Full retirement
- Changing residence
- Start receiving Social Security income
- Eligible for Medicare.
- Start receiving retirement distributions
- Refinancing mortgage
- Reconsidering investment philosophy
- Significant investment gain
- Significant investment loss
- Considering investment opportunity
- Receiving inheritance
- Stipend to family member
- Gift to children / grandchildren
- Develop / review estate plan
- Create a foundation
- Create or fund a scholarship
- Fund a cause or event
Transitions Change Over Time
Once we’ve plotted your anticipated life transitions on your $Lifeline, we can start proactively discussing the transitions that are most important to you from an immediate planning standpoint. Maybe you need to understand the financial implications of taking care of an aging parent. Perhaps it’s figuring out how to pay for your kids’ education. Or you may want to know the best time to start receiving pension payments.
Over time, as new transitions arise and old ones get completed, we can add, remove, and reprioritize transitions as necessary.
The easiest way to throw off your financial plan is to make a rash, emotional decision in the middle of a difficult moment. The $Lifeline, and our Life-Centered Planning process, will help you avoid reacting – or overreacting – to the ebbs and flows of your life by putting you into a more proactive mindset about your financial future.
You’ll be less likely to take on a risky second mortgage to pay for your son’s freshman year of college or your daughter’s wedding if you plan for those events in advance—something the $Lifeline helps you visualize.
As you prepare to go through the $Lifeline exercise, take a look at the categories and transitions listed above. If you’re married, talk to your spouse about them. Write out a list of transitions that you know you’ll want to plot on your $Lifeline. When we meet, we’ll fire up the tool and create your personalized $Lifeline so you can start preparing for life’s big transitions.
- This material is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept for any particular advisor or client. These materials are not intended as any form of substitute for individualized investment advice. The discussion is general in nature, and therefore not intended to recommend or endorse any asset class, security, or technical aspect of any security for the purpose of allowing a reader to use the approach on their own. Before participating in any investment program or making any investment, clients as well as all other readers are encouraged to consult with their own professional advisers, including investment advisers and tax advisors. Faithful Steward Wealth Advisors can assist in determining a suitable investment approach for a given individual, which may or may not closely resemble the strategies outlined herein.
- Some information in this blog post is gleaned from third party sources, and while believed to be reliable, is not independently verified. The statements contained herein are based upon the opinions of Faithful Steward Wealth Advisors.