Preparing financially for life transitions

January 12, 2022

Ron Detweiler, CPA, CSA
Senior Tax Manager

Life transitions are to be expected for most folks as we progress through life, and the financial impact and impending decisions can be overwhelming.

Virtually every life transition can have monetary implications. Planning can be a challenging road many struggle to navigate, but the key for most people is to start conversations early, be better prepared and have that enviable "roadmap to success."

There are many questions we will face as we progress through life's many stages but being prepared financially is of critical importance. Planning for emergencies and income disruptions are at the top of the list, followed by knowing how much money is needed for children, health care and retirement.

We might ask ourselves, when is retirement affordable? Are our hopes and dreams affordable? Will our assets last? In addition, a host of other thoughts involving quality of life can also weigh heavily on our minds.

Identifying life challenges and finding ways to overcome or plan can lead to greater success in the quality and outcome of our lives.

Early and ongoing planning discussions are important. It is imperative to have a current list of all financial accounts, advisers, computer and account passwords, access points, legal documents, medications, dates of birth, Social Security numbers and instructions ready in the event of an emergency or unplanned life event.

This also presents a wonderful legacy for a spouse, family or friends should they need this information available in chaotic times. It also can be beneficial to review and plan for financial risks and specific areas of concern.

Much of this planning starts with identifying and documenting core people that could include family, friends, an attorney, or financial and tax advisers.

Having a list with contact information is crucial along with making sure you periodically identify and update your beneficiaries, personal representatives, trustees, power of attorney, health care agent and medical professionals as circumstances change.

As we plan for the next phase of life it can be helpful to establish direct deposit of all income payments.

In addition, consolidating accounts and reviewing account titling of all assets to include Transfer on Death (TOD) or proper naming and beneficiaries for Revocable Trusts is recommended.

Simplifying and downsizing clutter and stored personal property can be useful to family or representatives for later in life.

Education and decisions involving Social Security and Medicare options can be explored and arranged in advance. Additionally, developing a strategy including income stream and tax efficiencies also can be part of conversations and options.

Some of the most difficult choices relate to identifying specific asset and income accounts to take distributions from.

Starting early to review and plan for income and expenses can be beneficial to establishing that roadmap to success.

This includes periodic monitoring and review of financial assets, income streams and living expenses as they change in time.

The true key is a lifetime of learning, focus and preparedness to be ready when life transitions occur. It is important to leverage local and community resources, engage early with core people and document all important information identified above.

Many professionals are available to assist with pulling this information together and adopting a "be prepared" attitude with a shared interest in assuring you are truly ready and can enjoy the quality of life that is your intended outcome.

This article was previously published in the Tri-State Business Times.

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