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Review financial strategies after life events

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Posted: Tuesday, November 6, 2012 2:49 pm

If nothing ever changed in your life, you could probably chart your financial and investment strategies and then forget about them. But your life is full of changes — and many of them will require you to take a new look at how you save, invest and protect your family.

Let’s run through some of the most common milestones in life and see what sort of moves you might make in response:

• Marriage — It sounds obvious, but once you’re married, you have to stop thinking in terms of “one” and start thinking of “two” in most aspects of your life — including your finances. For example, if you are an aggressive investor but your spouse is more conservative, you both may need to compromise and choose an investment strategy that’s “down the middle.” At the same time, you’ll want to set some common goals, such as saving enough for a down payment on a home.

• Children — When you have children, you have to protect them today — and invest for their future. Your first step, then, might be to purchase life insurance. You can typically buy a term life policy at very reasonable rates.

The exact amount of coverage you need depends on your individual situation, but you’ll probably want at least enough to pay off your mortgage and send your children to college should anything happen to you. And to protect your income, you might want to consider disability insurance. Finally, it’s never too soon to start saving for college. You might want to consider opening a tax-advantaged account, such as a Section 529 college savings plan.

• Job changes — When you leave a job, you may well have an important decision to make about your 401(k) or other employer-sponsored retirement plan. If you don’t need the money right away, you might want to avoid cashing out your plan, because you’ll likely face an immediate tax bill — and you’ll have fewer resources for retirement. Consequently, you may want to roll your 401(k) to an IRA or your new employer’s plan, if it allows such transfers. Before taking action, consult with your tax advisor.

• Remarriage — If you ever remarry, you may need to change the beneficiary designations on your 401(k), IRA and other investment accounts. You also may need to work with your attorney to revise your will, living trust and other documents related to your estate plans.

• Retirement — For many decades, you saved and invested for your retirement. Once you retire, however, you should move away somewhat from the “accumulation” phase and start thinking instead of how best to manage the money you have accumulated. That means you’ll need to decide when to start taking Social Security and how much to withdraw each year from your various retirement accounts, such as your 401(k) and IRA. A professional financial advisor can help you develop a withdrawal rate that’s suitable for your individual situation.

You’ll encounter many important events on the road of life. By making the right financial moves along the way, you can help make the journey more pleasant.

• This article was written by Edward Jones for use by Ahwatukee Foothills Edward Jones Financial Advisor Kim DeVoss, CFP. Reach her at (480) 785-4751 or

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