6 min read

Financial Planning Tasks for Big Life Transitions

Financial planning is about more than maximizing your money. It's about being prepared for what comes next. Financial planning puts you in the driver's seat, even when life surprises you. Significant transitions like job changes, divorce and retirement are much more comfortable and less stressful when you can focus on the transition itself and not worry about the financial implications of your next chapter.  



The transition from student to working adult is when many young people make financial mistakes with lasting consequences, like racking up credit card debt. Financial planning helps young adults avoid those costly mistakes and build healthy financial habits from the beginning. 


Young adults may benefit from speaking to financial planning advisors about topics including:


  •   Budgeting, taxes and general financial literacy. Financial planners can be a helpful resource for anyone new to money management. Advisors can explain concepts like compound interest, help clients prepare for tax season, create monthly budgets and answer general money questions
  •   Insurance planning. Most early-20 somethings have minimal insurance needs beyond health and car insurance, but not all. Advisors can help assess current coverage needs and anticipate how their insurance needs may change as they move through life. 
  •   Investing 101. Many young people have little to no investing experience and have many questions that advisors can help answer. (E.g., How does the stock market work, exactly? Why does portfolio diversification matter? What do you need to know about taxes and investing?)
  •   Retirement planning. It's never too early to start retirement planning. Financial planning allows young workers to think about their retirement savings goals, understand the various paths to achieving them, and start saving. 



Getting married and getting divorced inevitably have significant financial implications for both partners, and every couple's specific circumstances will shape conversations with their advisors.


Financial planning tasks before marriage or divorce may include:


  •   Tax planning. Before marriage, couples should speak to their advisors about the merits of filing jointly vs. individually, any relevant marriage tax penalties/benefits and how their tax brackets and tax bills might change after marriage. Before getting divorced, couples should ask their advisors about tax filing for the next few years. What should your filing status be once you're divorced? How will the two of you handle any taxes, credits and deductions for shared property? If either spouse will receive child support and/or alimony, both parties may need to do tax planning around those payments as well. 
  •   Insurance planning. Health insurance, home insurance, car insurance, long-term care insurance and life insurance may all require planning ahead of a marriage or divorce. Financial planning can help couples determine the coverage they need and make equitable plans for paying the premiums. 
  •   Merging or separating finances. This can be a thorny process for both happy, engaged couples and divorcing couples. A financial advisor's neutral input can be helpful.



Most parents go through two major transitions that involve financial planning: first, when they have kids, and later, when the kids become independent adults and no longer need their financial support. (That said, parents of kids who are severely disabled or will otherwise need financial support into adulthood have some additional considerations around financial planning.)


Financial planning tasks for parents may include:


  •   Budgeting. Kids are expensive! New or soon-to-be parents may find it very helpful to work with their advisors to create realistic household budgets every time a new family member arrives. Once independent kids are out of school and working, parents may have more flexibility with their spending. Consulting an advisor helps parents rework their budget to reflect their new reality.   
  •   Insurance planning. Parents often get life insurance when they have their first child and may let it lapse once the kids are adults. Sometimes, however, it makes sense to extend a term life insurance policy even if the kids are transitioning into adulthood. Additionally, parents need to address health insurance for kids, both when they are born and when they're aging out of their parents' coverage. Some families also elect to buy disability insurance if their circumstances warrant adding this extra level of protection. 
  •   Education planning. There's no one "right" way to save for college. A financial advisor can help parents assess their options around 529 college savings plans and other savings vehicles and design an education savings strategy to maximize their education dollars without neglecting their retirement savings and investments. 
  •   Estate planning. Estate planning is imperative for new parents and parents of kids transitioning into adulthood. Parents of young children need to put legal guardianship plans in place and arrange financial support in the event that they pass while the kids are still young. Planning should also be done around transitioning assets to the children. Trusts may be used for minors or disabled adult children who need oversight.   



Most working adults will transition to a new job more than once. Every time you move to a new job, it's a good idea to reassess your financial picture and do some planning around the things that are about to change. 


Financial planning tasks ahead of a job change may include:


  •   Evaluating the financial impact of the transition. Consult your financial advisor if you're considering a potential new job offer. They can help you assess how your total compensation and expenses might change and how that will affect your overall financial health. (E.g., is taking a higher salary worth sacrificing some of your benefits or moving to a place with a higher cost of living?)
  •   Insurance, tax and retirement planning. There are many ways your insurance, tax and retirement plans can be affected by moving to a new job. Get clear about your updated plans before you get busy adjusting to your new workload. 
  •   Planning around stock options. Leaving a job where you've been compensated with employee stock options certainly calls for a conversation with your advisors. They can help you determine the next best steps, depending on whether your options have vested.  



Even if you've carefully planned around it for decades, retiring is a huge transition. Ensure your financial plans are ready before you leave your paycheck behind. 


Financial planning tasks ahead of retirement may include:


  •   Budgeting. Living on a fixed income may require new retirees to change their spending habits. Financial planning helps you understand exactly how much you can spend each month without derailing your broader financial goals for retirement.
  •   Strategizing about Social Security and the timing of distributions from retirement accounts. Many factors can influence when you should claim Social Security benefits and when you'll take money from accounts that don't require minimum distributions (such as Roth accounts). These decisions can get more complicated for married couples when both spouses are eligible for Social Security and have retirement accounts to draw from. 
  •   Tax planning. Avoid surprises in your first tax season post-retirement by strategizing how your tax picture will change.  It also makes sense to consider the accounts from which you take withdrawals to minimize taxes over the long term.



Financial planning around a severe or terminal illness is stressful at the moment but makes everything that comes next just a little easier to bear—both for the person who's sick and for their loved ones. 


Financial planning tasks around illness or death include:


  •   Covering necessary care and end-of-life services. Age, prognosis, family structure and resources are all key factors that affect the conversations a seriously ill client will have with their financial planning advisors. If you're still working, how will you compensate for the income loss if you're too sick to continue? How will you afford any in-home help you may need? What if you need long-term care? A severe illness may also disrupt existing financial plans if the expenses have to come out of your savings and retirement money, so that's something to discuss with your advisors. Finally, anyone facing a terminal illness may wish to do some financial planning around funeral expenses so their survivors aren't stuck with a huge bill. 


  •   Final estate planning. When death is imminent, all your estate plans must be in order. Both to ensure your final wishes are honored, your assets are distributed to the right people, and as a gift to the loved ones who will survive you. This may include reviewing your will, trusts and beneficiary designations; reviewing or creating advance directives about your end-of-life wishes; pulling together all the legal and financial documents your heirs will need to settle your estate; and sharing your estate plans with your loved ones to minimize surprises and conflict after your death. (Review this estate planning checklist for the terminally ill for more information.) Putting those plans in order makes it just a little bit easier for your survivors to navigate their own big life transitions without added financial stress. 



Sachetta's financial planning advisors work with clients at every stage of life, from young people new to the workforce to retirees planning wealth transfers to the next generation. Let's talk about what transitions may be ahead for you and your family, and what financial planning tasks you can do right now to help you prepare. Contact us today!


Janice_McGarryJanice joined Sachetta as Manager of Wealth Management Operations with the merger of Wealth Management Advisors. For ten years prior she was Operations Manager for WMA. She began her career in financial services in 1996 and has worked at both national firms and small wealth management practices. Over that time, she has excelled in client relationships as well as the operational aspects of wealth management firms. Janice is responsible for the day to day operations of Sachetta. This includes trading and rebalancing portfolios, firm compliance, servicing client requests, and handling our client onboarding processes as well as ensuring all of our systems are running smoothly.