Transcript
Speaker: Hi, everyone. Welcome back to the Future of Finance podcast. I'm your host, Marissa Wood, with Union Financial Services. And in today's episode, we're going to dive in to the 10 life events that should trigger a financial checkup.
Speaker: And if you're like most people, when something health-wise goes on, whether you are starting to experience shortness of breath or maybe you want to lose some weight or you did lose some weight or maybe you or thinking about starting a family or someone in your family did get diagnosed with something and you want to see if you carry that gene, any of those health events usually trigger you wanting to set up a checkup with your doctor, right?
Speaker: Well, it works the same when it comes to your finances. Certain life events trigger a need to sit down with your financial advisor or ultimately hire that financial advisor for the first time.
Speaker: and so we're going to go through some of those life events and what they are, and maybe you're experiencing some of them right now at this very moment or You can stash these ideas away and have them in the back of your head so that you know when something like this happens to yourself or a friend or family member, it's the time to get in touch with your financial advisor.
Speaker: And so the first life event is when you experience a job change. Whether you started a new job or you left a previous employer and now you're moving to a different employer, or maybe you wanted to start your own business and leave that corporate world.
Speaker: All of these job changes create the need to meet with your financial advisor because few reasons. Well, your income might change. Now we need to adjust for that.
Speaker: And you also are probably going to have a company 401k or retirement plan that you'll need help rolling over into an individual retirement account, an IRA. And we can help you do that. We can consolidate old 401ks,
Speaker: Or maybe if you're starting your own business, we can set you up with something that you manage yourself with our assistance. A SEP IRA, a simple IRA, individual 401k, these are all available to self-employed individuals.
Speaker: And just because you're self-employed now doesn't mean you can stop saving for retirement. We just have to adjust that strategy. So any job change, if you hear someone saying that they're starting a new position or leaving their current position or maybe exploring their options, tell them to reach out to a financial advisor or maybe share our contact info.
Speaker: That goes for existing clients as well. We want to be in the loop. Now, another life event is marriage. Anytime you're about to get married or you just got married, your financial world changes drastically.
Speaker: In the tax world, it's a good thing because now you're married filing jointly. And so it will give you a break on taxes. Your income will be combined. The tax brackets tend to benefit those that are married.
Speaker: But it also means we have to start creating a budget for your household income. Do we know if we're living on both salaries or mean maybe we living on one salary and banking the other?
Speaker: Are both parties investing? Are both parties set up with retirement contributions? Is everyone on the same page? Now, it doesn't mean that both people have to be savers or both people can be spenders.
Speaker: Usually, it tends to lean more towards one way or the other on each party. We often see one person is more of a saver and one is more of a spender, but we just want to make sure everyone's on the same page.
Speaker: And so whether you're about to get married or just did, it's time to sit down and look at what your financial future looks like so that you can really set up that marriage for success. Now, another life event is moving.
Speaker: Whether you're moving to a new state across the country or you're just moving down the street, what happened? Your address changed. And so anytime your address changes, you have to get in touch with your financial advisor, your banks,
Speaker: really all of your credit card companies, almost everyone in your life. I know because I just moved a few months ago and man, the list of places to contact to update my address felt really long, but it's a necessary evil.
Speaker: We don't want our mail, especially financial documents, going to a home where we no longer live. And so anytime you do move, It's a great idea to make sure that all of your investments and bank accounts have that updated address.
Speaker: It's very simple. That can be a simple phone call to your advisor, if I'm your advisor, and we can update it with the forms or either on the phone, depending on the company. And the other reason that it's important to do a financial checkup when you move, maybe you have a nice lump sum of money.
Speaker: Maybe you're downsizing or you're going from owning to renting and you have that lump sum that you can invest. And what do we want to do anytime we have a lump sum?
Speaker: We want to make it grow. We don't want to park it in the checking account where you're going to earn little to no interest. If we have a couple hundred thousand dollars and we can earn 5, 10, even more percent interest on that, then you're really going to be making money while you sleep.
Speaker: That's where we all want to be in life. So thinking about moving or recently changed addresses, let's do that checkup. The fourth life event is if there is a new child in the picture.
Speaker: This could be a first time child or it can be you just adopted a child or you had your second, third, fourth baby. Well, your finances are going to change.
Speaker: Your expenses are going to change. Your disposable income is going to change because your expenses are probably higher. But you also might want to discuss opening up an account for that child.
Speaker: Start saving for college for them. Or maybe you just want to start some kind of custodial account that they'll have access to once they're 18. Or maybe you want to set them up for retirement.
Speaker: Sounds crazy, but a very small amount when they're a baby can become life-changing, potentially millions by the time that baby is retired.
Speaker: So those are the conversations we can have with you once you're expanding your family. We also definitely want to talk about life insurance once a baby comes into the picture. I like to get life insurance in place before that child, but Anytime is better than never. So whether you have a newborn, five-year-old, 10-year-old, or you're just thinking about maybe starting a family, let's get that life insurance policy for both parties so that, God forbid anything happens, that child's going to be taken care of.
Speaker: Now, life event number five is if you paid off debt. That's awesome. Congratulations if that is you, whether you paid off a mortgage, you paid off a student loan, maybe you paid off a car loan.
Speaker: had a client contact me recently and say, i finally paid off that car loan and now I have an extra $400 a month that I can spend or I can invest or maybe ah mixture of both.
Speaker: You know, anytime you have extra disposable income, whether it be $100, $200, $300, $400, it's a good time to start that investment account. Maybe we take that $400 that you were putting towards paying off your car and we open a Roth IRA or we open a brokerage account.
Speaker: or some kind of tax-free life insurance plan, something that's going to earn interest for you. And in the future, you're going to be so happy that you invested consistently and didn't just spend that extra money. If it's found money, let's invest it.
Speaker: Number six is if you've received an inheritance, or got a lawsuit settlement. Now, that's what we like to call a windfall in the world of investing.
Speaker: And could be good, could be bad, because... You know, of course, it's great you have this lump sum of money, but it might indicate that you've either lost a loved one if you received that inheritance or a lawsuit, probably something bad happened for you to be receiving any kind of settlement. So I don't ever want to wish that upon anyone.
Speaker: But when it does happen, let's make it life changing. You know, we've all heard of people winning the lottery you being rewarded a huge law settlement, and then couple years later, that money's gone, even if it was millions.
Speaker: and they have nothing to show for it. That's terrible. it It's extremely common. We work with a ton of personal injury attorneys and you know they work really hard to get their clients that settlement.
Speaker: And they say to us, please enforce the value of saving and investing to this client. I worked really hard to get them X amount of money. I'd like to see it sustain them for their life, especially if they're disabled and can't work again.
Speaker: Or I'd at least like to see them earn extra income on that money. If that million dollars can turn into two million by the time they retire, that's pretty amazing. That is life-changing.
Speaker: And that can then allow that money to stay in their family for multiple generations. This also goes for an inheritance. They say that most of the time, inheritances don't make it to that third generation because that first generation that inherited it ends up spending all of it.
Speaker: And that's really probably not what the person wanted who left that legacy to you. We gotta make that money work for you and that all comes with planning properly and with a professional.
Speaker: And so if you think you're going to be receiving a settlement or an inheritance, or you did, or you're an attorney that deals with that, let's have a conversation about how we can get that money to truly be life-changing in the most positive way possible for you.
Speaker: Now, number seven is not an exciting life change. something I think we all hope to never experience, but that is divorce. Just as it's important to meet with an advisor when you're getting married, it's probably even more important when you're getting a divorce.
Speaker: because your financial world is being flipped upside down. Every asset that you own is probably being split up, especially those retirement assets that must be split up depending on court orders.
Speaker: You might be selling a property, you might be buying a new property, starting to rent, there could be alimony child support. Divorce is extremely financial.
Speaker: And so to face it without a financial advisor, is a terrible idea and it could be costing you tons of money in your future. And so if you're in the process of a divorce or you think it's coming or maybe you just finished getting divorced or you know someone that has, let's sit down with an advisor and let's talk about your new financial reality and how to make sense of it.
Speaker: Number eight is very similar to the topic of divorce. It's even more tragic, I would say, and that's the loss of a spouse. Anytime there is a loss of a spouse, that's also a huge financial event.
Speaker: Now, hopefully that spouse had some life insurance in place to help bridge that gap of what's going to be your new reality. Your income's going to change as a household.
Speaker: Your assets could change. Expenses usually don't change a whole lot. And I think that's a misconception. People will say, well, if something happens to my spouse, I know I'll lose his income, but our expenses will go down a lot.
Speaker: That's really not true. Your mortgage payment's not going to change, your rent's not going to change, your utilities might go down a hair, and your food prices might go down a little bit because you're spending on one less person, but the rest of your expenses are not going to decrease drastically.
Speaker: And so that loss of a spouse really does create that need to sit down with an advisor and review what your budget looks like, what you're saving, what you're investing, maybe what they had invested.
Speaker: If they had retirement accounts or IRAs, that then needs to be placed into your name. Their 401k or IRA, becomes now your 401k or IRA.
Speaker: But it doesn't happen automatically. A professional has to help you convert that into your name. And then what it also has to happen once it becomes in your name, we gotta update those beneficiaries.
Speaker: Because I've actually seen this happen where one spouse passes away and he has his wife listed as beneficiary. His wife now takes ownership of the account, but she never updates her beneficiaries.
Speaker: And so if something happens to her, it's not going to seamlessly pass to her kids or her heirs. It's then going to go through probate and a whole big disaster because she didn't properly take ownership of that account and relist beneficiaries.
Speaker: It's a super common mistake. And i think when everyone's in that process of grieving, it's kind of the last thing on your mind. You don't want to be bothered with these small financial details.
Speaker: But that's why it's an important step to have a professional doing it for you. We'll take that work off your plate so that you can truly grieve but have everything in the background taken care of.
Speaker: So that's a big one, divorce and loss of spouse. Now, number nine is little bit more exciting and uplifting, and that is the life event of turning 59 half years old.
Speaker: And it's such a funny age in the financial industry, 59 and a half. you know Why not just call it 59 or why why not just call it 60? But for whatever reason, the government has deemed 59 and a half as the golden age of retirement in the world of retirement plans, 401ks, 403bs, IRAs.
Speaker: That is the age when you can officially start taking withdrawals or distributions from those retirement accounts without penalty. Now, prior to that, if you wanted to take a withdrawal from your IRA at 45 or 50 years old, you'd be hit with a 10% early withdrawal penalty from the government.
Speaker: That's no fun. Why would you want to lose 10% of your account for nothing? Well, once you're 59 and a half, that penalty is no longer applicable. You can have access to all of your funds without penalty to start taking distributions from, or if you're at an active employer still, you're still working,
Speaker: you also have the ability at that point to do what's considered an in-service rollover. And that is when you're still at your employer, but you wanna roll those four ah one k funds into an IRA where you'll have more control, more choices, more options, potentially lower fees.
Speaker: You have really a world of solutions at your fingertips once you turn 59 and a half. And so if that's you soon or you're approaching that birthday or maybe you just turned 59 and a half, let's have a conversation and talk about all the options you now have.
Speaker: And finally, the last life event that triggers a financial checkup is probably our most obvious one, and that is you retired or you're about to retire. That is such an exciting day in our world because we've likely been planning for it and investing for most of our life, 20, 30, 40, sometimes even 50 years of planning for that retirement date.
Speaker: And then it's finally here. And what do most people do? They're scared to spend their money because, oh my gosh, now I don't have that paycheck coming in anymore. i have this lump sum of money and it's supposed to last me forever.
Speaker: And when do I take Social Security? Should I take early? Should i take late? All of a sudden, all of these questions start swirling around our brain and we think, should I even have retired or should I get a part-time job now?
Speaker: Well, let's talk about it. Hopefully you can truly retire and we can set you up with income that you can never outlive so that you can spend your money and enjoy it.
Speaker: We didn't work our whole life just to get to retirement and then feel terrified. No, that's what advisors are for. We want to help you enjoy that money that you worked so hard to save. And so if you're about to retire or you are retired, let's have that financial checkup.
Speaker: I think it'll help you really live that healthy retirement. So if there's one takeaway from this, I would say it's that life doesn't stand still and neither should your financial plan.
Speaker: always going to be changing and evolving, and you have to keep your financial advisor in the loop of all those changes so that we can adjust your plan accordingly. And so if you found this episode helpful, please share it with a friend or colleague who's facing a big life transition, or maybe you are as well. And if you have any questions that you'd like answered on an individual basis, feel free to go to our website, union-financial.com and click schedule a meeting where you can choose a Zoom call, phone call, or in-person meeting, always complimentary, and we can answer your specific questions. Don't forget to subscribe, like, and share, whether you're on YouTube, Spotify, or Apple.
Speaker: Thanks for tuning in to another episode of the Future of Finance podcast. I'm your host, Marissa Wood with Union Financial Services, and we look forward to helping you live a better financial future.
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