A Good Financial Plan Is One That Evolves

EsqWealth is a strong advocate of continuously revisiting your financial plan. We believe it is not a set-it-and-forget-it activity. Rather, a good financial plan is one that is ever evolving based on your changing life circumstances. Careers evolve. Big changes happen like marriage, having a child, a grandchild, or getting a new job. When changes happen, your goals and priorities may shift and may warrant adjustments to your long-term plan.

Below are a few instances that may call for revisiting your financial plan taking into account your financial goals and steps to consider.

Changes in the Family

Marriage, divorce, the birth of a child, or a death in the family are all major life events that have an impact on your finances. When any of these events occur, it can be helpful to sit down with a financial advisor to revisit your plan.

For example, marriage may mean you combine finances with your partner and start saving for retirement and other goals with a dual income. It may also mean that you are taking on your partner’s debt or other financial obligations, which could have a big impact on your ability to reach your objectives.

If you get divorced, you may need to adjust your plans to reflect a single source of income and look for ways to make up for any savings as you and your ex separate assets.

After the birth of a child, consider starting a college savings plan that provides tax-advantaged growth to help you save for education expenses.

Changes at Work

A significant change to your income, whether from job loss, furlough, a big raise, or a move to a different career, should trigger a financial check-in.

For employees of publicly traded companies, there may also be stock-option considerations depending on whether the options are incentive, restricted, and vested. If you have worked for a company whose stock gained significantly in value over your career, there is also a strategy that is not commonly known that could save a great deal in taxes.  An entire article could be written on the subject, but here it’s worth to mention that the IRS allows such employees to make an election for the Net Unrealized Appreciation (NUA) of employer stock to be taxed at a more favorable capital gains rate.

If you get a new job with a significant bump in pay, for example, you may be able to save more in retirement or taxable accounts. Or you can use the extra income to pay down debt. What’s more, your new employer may offer a different set of benefits, such as new retirement plan options, that can impact how you save. 

Job loss may mean that you need to dip into your emergency fund while you get back on your feet. You’ll need to come up with a plan to replace the money. You also may need to reassess your spending and determine where to scale back to continue meeting your savings goals. For example, you may no longer be able to afford pricey gym memberships or frequent vacations.

A decrease in income—perhaps due to a move to part-time work—may require you to reimagine your retirement if you aren’t able to save as much as you once planned for. Find ways to trim retirement expenses, such as downsizing to a smaller home.

Shifting needs and goals

As you grow and change it’s natural to assume that your goals, needs, and priorities will as well.

For example, as you near retirement age, your financial needs may shift from accumulating wealth to protecting your assets. This may call for a discussion about your views on reallocating portions of your portfolio into more conservative investments to help shield your portfolio from risk. Of course, interest rates, inflation, and economic forecasts must also be considered.

It’s possible you’ll also change your mind about certain goals over time. Maybe you were initially planning to move to a state with a lower cost of living when you retire, but now you have grandkids nearby you want to stay close to. This change of heart may mean reassessing your estimated expenses in retirement and adjusting your savings accordingly.

In addition to revisiting your financial plan during major life events, set up regular check-ins at least annually to keep up with your current goals. At EsqWealth, we can help you take an in-depth look at your goals and finances and determine the steps you need to take to reach your financial goals.

The information above is not intended to and should not be construed as specific advice or recommendations for any individual. The opinions voiced are for general information only and are not intended to provide, and should not be relied on for tax, legal, or accounting advice. To discuss specific recommendations for any unique situation, please feel free to contact us.


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