Investment Planning for Major Life Changes

Investment planning is a lifelong activity which, for most investors, is geared to lifetime major milestones and lifecycle events. 

Marriage, having children, buying a home, saving for college tuition, and retirement are the high factors of many people’s lives. Despite these life events being a source of happiness, they bring financial obligations, and engaging in long-term investing is an important strategy for meeting those obligations.

But life can turn on a dime and unexpected events can impact – or even derail – even the best investment planning efforts. Job loss, divorce, major illness, or an unexpected death can jeopardize the plans that investors have for their lives, necessitating a reassessment of financial priorities.

Sound investment planning includes preparing for unforeseen events and working with an investment advisor who can help you build a portfolio that protects you, as well as funds your goals. Here are a few broad recommendations for approaching the task.

Understand Your Needs and Goals

The key to establishing a sound investment plan is understanding your needs and goals. Saving money to buy a home or real estate is different than saving for retirement. The time horizon is shorter and requires a mix of investment and saving instruments that will help you reach your goal faster. Saving for college tuitions offers the advantage of 529 Plans and Coverdell Education Savings Plans that give you tax-deferred options.

Understanding the various investment, saving and management options that can help you reach specific goals is important. However, it requires a discussion and clear vision of what those goals are before an effective portfolio of investments can be built. 

Bear in mind that unexpected events (like the Coronavirus Pandemic or unpredictable market conditions) may impact your savings plan. Build in some savings capacity to cover some of those costs.

Discuss your vision and financial situation with an investment advisor as a starting point, and make sure you and your spouse share the same vision about financial planning before getting started. 

Understand Your Situation and Options

Start early – as early as possible – and don’t overlook any investment options that can help you achieve your goals and financial security over a period of time. This means participating in your company’s 401(k) plan (if the company has one) and establishing a separate Roth IRA for a dual-track retirement planning strategy. If your company has a match in the 401(k) plan, be sure to defer enough from your annual income to qualify for the match. That’s free money and constitutes a safe way to add to your nest egg; it builds over time to significantly boost your retirement savings and help you meet your retirement goals.

For college tuition, start saving as soon as your baby is born. Yes, babies cost money, and you have a lot of other expenses to think about through your different life stages. However, when that first tuition bill arrives, you will be grateful for having made the sacrifice early and having contributed regularly to the education savings account.

Special Needs Investments and Financial Plans

As life changes, you may encounter new needs or new challenges. Sometimes, specialized savings and investment opportunities exist that serve these needs.

For example, if you have a child with a disability, investing in an Ohio STABLE account can help fund the child’s education, medical care, living costs, legal fees, transportation, assistive technology, and more. Importantly, the money you save in a STABLE account does not impact your child’s eligibility for government assistance.

Your advisor can guide you to develop an investment portfolio and develop any special needs-related investment planning options that may fit your circumstances and help you make important investment decisions.

Preparing for Major Life Changes with Investment Planning

Divorce, sudden illness, an unexpected death, and economic downturns are among the most disruptive and major life events that people can face, and they all necessitate major changes in savings plans and your investment strategy. Talk to your investment or financial advisor about how to prepare for the unexpected to protect your savings and your life goals.

It’s never too early to start saving and investing for the future. Contact your Barnes Wendling advisor to start the discussion about investment planning, your financial goals, and current situation.

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