If you have a personalized financial plan, congratulations — you’re already working toward your goals.
But just like many things in life, your financial plan isn’t set in stone. That’s why the best plans include a range of financial options that give you the financial flexibility to pivot as your life evolves.
So when does it make sense to revisit your financial plan? What kinds of events in your life might spark a conversation with an advisor? Here are a few examples of when you may need to adjust your financial plan so you’re ready to embrace what you want to do today and stay on track for what you want to achieve tomorrow.
When you have a new dream that requires financial resources
If the pandemic taught us anything, it’s that we should stop putting off until tomorrow what we’re dreaming about today. Maybe you’ve decided you want to travel the world with your family, take a sabbatical to explore a passion project, or finally take the first steps to being your own boss.
The reality is that all those things take money. The good news is that if you’ve done good planning, you may have the financial flexibility you need to take life in a new direction. But it’s important to update your plan so you see how the decision may impact other goals. Then you can move forward with confidence.
When your income grows
If you got a promotion or found a new job that comes with a big pay hike, you’ll have extra money on your hands. This is a good time to look at your plan to see what goals you want to put your new money toward (ones today and in the future).
If you have a new compensation package that includes stock options, bonuses or access to new benefits, it’s a good idea to let an advisor review everything to see how it might impact your financial plan and your tax situation.
When your income shrinks
Any number of life changes could lead to periods when you’re living off less income than usual. Maybe you want to temporarily leave the workforce to raise a family or decide you want to go back to school to pursue a new profession. Or perhaps you’re ready to launch a business but know it will take a while before the income starts coming in. That could mean periods where you’re temporarily living off savings or have one income instead of two. If you’re anticipating a life change that could reduce your income, check in with your advisor to see how to prepare for it, how you may need to adjust your budget, and how you can continue to make contributions to financial goals like retirement.
When you want to start or expand your family
Whether you’re getting married, having your first child or planning for the next one, nothing sparks a bigger change emotionally or financially than growing your family. If you’re getting married, a financial advisor can help you think through all the implications of merging your finances and setting goals together. If you're planning for new additions to the family, it’s important to prepare not only for the costs associated with a new bundle of joy, but also to figure out if you want to start saving and investing for their future, such as by opening a 529 plan. Plus, with more people relying on you, it’s a good time to figure out if you have enough life insurance to protect your family should something happen to you.
When you want to adjust your retirement plans
Retirement might be one of the few goals you start saving for before you fully understand what it could look like for you. But as you get older, you’ll start to have more clarity on what kind of lifestyle you want and the type of progress you’re making to get there.
Did you initially imagine a quieter life near family, but now dream of globetrotting? Do you want to move your retirement date up, or will you need to spend more time in the workforce? And sometimes, unexpected circumstances like an illness can force you into retirement unexpectedly. A financial advisor can look at your current retirement investment strategy and income sources and help you figure out how to adjust your plan in a tax-efficient way, based on your new timeline and goals.
When you receive a windfall
Whether it's through an inheritance, a bigger-than-expected bonus through work or selling a business, receiving a windfall is a good reason to revisit your plan. You may decide to use that money for current goals, incorporate it into your estate plan for future generations, or gift it to your favorite philanthropic cause. Talk to your advisor to figure out what the tax implications could be for those assets and how they can be used to your advantage.
These are just a few examples of the circumstances that could prompt a conversation with your advisor — truth is, there are many reasons to revisit your plan. When in doubt, if you have a life change on the horizon or a new goal that you want to achieve but you’re not quite sure how, reach out to your advisor so you can talk through the range of options that are available to help you get there.
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