Onward and Upward: Tips for Managing in Transition 

Most people experience several transitions as they travel the path from youth through adulthood. Change can be difficult for anyone, but these phases in life pose special challenges – including financial ones – brought on by new people, places and living environments.

Learning from Others’ Experience Aids Transition

To navigate transitions, we need to manage the unexpected while adapting to new ways of working, living and interacting. Each year, people of various ages tackle transitions – whether they are entering a new school or workplace, or embarking on a new stage of life. Here are some thoughts on what to watch for, and plan on, in seven common life transitions:

  • Entering High School
    Set ground rules and ensure students get acclimated before taking on too much as they juggle academic priorities and plentiful activity options. Anticipate greater transportation needs and independence as students advance, and plan ahead for pricey opportunities such as sports and academic competitions, overseas travel and other school events.

  • Starting College
    You can still save on taxes by contributing to a college student’s 529 plan but the benefits are greatest when dollars can grow tax-free over time. Be sure you know the process and time required to disperse your student’s 529 funds, as it can take several days or weeks. Expect significant expense for dorm-room furnishings and living supplies in addition to tuition, books and housing. Also, for best possible access to funds, plan to calculate your income taxes and file college financial aid applications, especially the Free Application for Federal Student Aid (FAFSA), as early as possible each January.

  • Working After College
    Establish a budget and live conservatively to ensure you can cover living expenses and student loans, and try your best to manage or (ideally) avoid debt. Embrace education and work opportunities to grow your skills, and take immediate advantage of employer-provided benefits including health insurance and retirement savings plans, especially 401(k)-match programs. Set up a separate savings plan to begin building your emergency fund.

  • Launching Marriage and Family
    As a couple, discuss and agree on your goals as well as your approach to matters requiring financial forethought. Put in place life insurance and disability insurance to protect loved ones should the unthinkable happen and tap employer-based flexible spending accounts to help manage health care or day care expenses. Start contributing early to a 529 educational savings plan for the greatest tax advantage.

  • Changing Job or Career
    When considering a job change, assess the costs and potential impact of changes in your commute, wardrobe, work hours and employee benefits. If you have a 401(k) or IRA with a previous employer, be sure to roll over these funds to avoid tax penalties and stay on track with retirement goals. Think about the financial implications as well as the length of possible unemployment if you are considering returning to school or pursuing a career change.

  • Living as an “Empty Nester”
    Take advantage of opportunities to increase savings in preparation for retirement as you continue to grow and preserve your investments. Focus your attention on what you’d like to do in retirement and test drive your plans to see how it feels to live in the way you envision. Ensure you have sufficient emergency savings, life insurance, retirement income streams, and a plan for handling a potential long-term care event.

  • Entering Retirement
    As you approach retirement, consult with a financial representative about various retirement income options. Plan to have several income streams available as you consider the best time to retire, how to transition your investments, the possibility of working part time and when to start taking Social Security. Be sure you are covered with health insurance or Medicare, have a plan for managing a possible long-term care event, and ensure you feel comfortable with your current portfolio strategy. Consider ways you can arrange for fixed monthly income to take care of your fixed monthly expenses so that you can feel confident that critical needs always will be met.

Managing transitions can be made easier when you learn from others’ experience and tap available resources. A financial representative can help answer your questions and plan for future transitions with a comprehensive financial security plan designed specifically for your needs.