Financial Tips for Every Life Stage


Major life changes can affect your financial road. Stay on track and ease the transitions with these wise moves.



Major life changes, such as getting married or starting a family, can affect the financial road ahead. But with just a few wise moves, you can make the transition from milestone to milestone with ease — while keeping your money matters headed in the right direction. Start with these:

Tying the knot. After you say those vows, conduct a financial audit to identify areas where consolidating debt or combining accounts (such as wireless services or insurance) could save you money. Reminder: Since marriage is a “qualifying event” for health plans, you don’t have to wait for open enrollment to change coverage.

You’ll also want to investigate the potential tax benefits of switching your filing status to married, filing either jointly or separately.* If you do make a change, update your retirement savings accounts, too, since contribution and deduction limits may change, as well.

Landing a new job. If your new employer offers a 401(k) plan, enroll as soon as allowed and take advantage of any match provided. If your employer doesn't offer a plan, consider starting a Roth or traditional IRA.

If your new job came with a raise, think about whether you can now afford to pay down credit card debt or student loans faster by making larger monthly payments. You could enjoy substantial savings on interest over the long term.

Having a baby. Before your baby arrives, examine your budget and look for ways to reduce expenses, so you can prepare for the new costs you’ll experience when your new family member arrives. You’ll also be ahead of the game — and ready to claim your dependent tax credit — by applying for your child’s Social Security number once you have a birth certificate.

Of course, the sooner you start thinking of how you’ll fund your child’s education, the more time you have to save and reap the rewards of compound interest. Research your options early, including a Coverdell Education Savings Account, which allows tax-free withdrawals for qualified expenses.*

Buying a home. Get to know the tax deductions you may quality for as a new homeowner, such as those for mortgage interest and loan origination points.* Those deduction savings might come in handy, too, as you update your monthly budget to accommodate a savings fund for annual home repair and maintenance. Setting aside 1 to 4 percent of your home’s value is recommended.

Preparing to retire. As you plan your retirement date, meet with a financial advisor to discuss withdrawal strategies. Many experts now believe the guideline of withdrawing 4 percent of your savings each year should be revised to 3 percent — as life spans increase and nest eggs are required to last longer.

Try to “test-drive” your retirement budget for a full year before you make the leap, so you can make reality-based adjustments. And remember, if you plan to work part-time after retirement, it could impact the tax-free nature of your Social Security benefits.*

No matter your life stage, your local Rabobanker or our experienced Wealth Advisors are here to help you find the banking products and services you need to meet your goals, today and tomorrow.

* Consult with your tax advisor for complete details.

Sources:

  1. “Money Moves for Your Growing Family,” by Brent Graff, Parents, http://www.parents.com/pregnancy/considering-baby/financing-family/money-moves-for-your-growing-family/, accessed Feb. 16, 2015
  2. "Tax Planning for Life’s Tax Planning for Life’s Major Events," by the editors of Kiplinger’s Personal Finance, Kiplinger, updated January 2015, http://www.kiplinger.com/article/taxes/T055-C000-S001-tax-planning-for-life-s-major-events.html, accessed Feb. 16, 2015
  3. “3 Strategies for Making Your Retirement Money Last,” by Beth Braverman, The Fiscal Times, posted Oct. 17, 2014, http://www.thefiscaltimes.com/2014/10/17/3-Strategies-Making-Your-Retirement-Money-Last, accessed Feb. 16, 2015
  4. “5 Money-Saving Insurance Tips for Couples,” by Angie Mohr, Investopedia, posted March 21, 2011, http://www.investopedia.com/financial-edge/0311/5-money-saving-insurance-tips-for-couples.aspx, accessed Feb. 16, 2015
  5. “Landed Your First Job? Make These Money Moves Now,” by Maryalene LaPonsie, MoneyRates.com, posted Aug. 08, 2014, http://www.money-rates.com/personal-finance/first-job-money-moves.htm, accessed Feb. 16, 2015
  6. “How Much Money Should Homeowners Set Aside Each Year for Maintenance and Repairs to Their Home?” eXtension, posted Dec. 8, 2013, http://www.extension.org/pages/42164/how-much-money-should-homeowners-set-aside-each-year-for-maintenance-and-repairs-to-their-home#.VOQTe_nF9yw, accessed Feb. 17, 2015




The information contained in this article is intended for general educational purposes only and is not to be construed as legal, tax, or financial advice. Please consult with your own legal, tax or financial advisor for guidance with your own particular circumstances.