Written by Cristin Rigg, CFP, CDFA
As we travel through each phase of life, it's important to give attention
to our goals for financial and physical health. Taking inventory involves
regular review, renewal and revision as needed.
Under Age 50: Family and Career Building Years
• Insurance protects us and those we love from loss of income due
to disability or death. Consider the right levels of life and disability
insurance you and your family need to maintain your lifestyle.
• The sooner you start planning for your retirement the better. Maximize
contributions to employer-provided plans such as 401(k) or 403(b) plans.
Also maximize contributions to an IRA or Roth IRA.
• If you have children, you will likely want to set aside money for
their education. Various accounts, such as 529 savings plans, allow you
to save for their college tuition on a tax-deferred basis. Recent legislation
allows up to $10,000 in annual withdrawals to cover K-12 school tuition.
• An estate plan should also be drafted and executed with the assistance
of a trusted estate planning attorney. It should include a living trust,
will, power of attorney for both finance and health care (advance health
care directive), and guardian documents.
Age 50: Pre-Retirement Years
• People in the 40 to 59 age range are often considered the Sandwich
Generation—a time when they are caring for their children and also
their aging parents. This may cause extra stress and strain—especially
for women who make up 75% of this caregiving group. Giving attention to
self-care is especially important during this stage.
• After age 50, you may find changes in risk management are needed.
Perhaps life insurance is less important as children begin leaving home,
and long-term care insurance becomes more important as you consider your
• For retirement planning, your priority may move more toward your
savings with employer plans and IRAs, as children complete college and
education savings is no longer necessary.
• A review of your estate plan is needed every three to five years.
Evaluate successor trustees and named agents to ensure they are still
appropriate. Many banks require current documents for powers of attorney,
so updating these documents is wise. Ensure your advance health care directive
still reflects your wishes for your care if you can’t speak for yourself.
Age 65+: Retirement Years
• Identifying where you will live, what you will do and how much income
you will need become your bigger concerns in this stage.
• Utilizing a comprehensive retirement plan becomes more important
than ever, as it serves as a lifetime roadmap to define your financial
goals and provide the tools and structure necessary to make the most of
the money you have.
• Understanding creative solutions for increasing income, such as
maximizing Social Security benefits by claiming them at the best time
for your situation, can greatly impact the overall success of a retirement plan.
• Consider consulting with a qualified financial professional to avoid
financial pitfalls that can’t be undone.
• Continue to review your estate plan every three to five years to
ensure it still reflects your wishes. Any major life event—e.g.
divorce, illness, death of spouse—should trigger a review. Consider
gifting strategies in line with your available resources. Managing mental
capacity may become more important at this stage and require updated powers
of attorney or advance health care directives.
Throughout our lives, keeping an inventory of the various parts of our
financial and health plans helps prepare for the unexpected. Whether it’s
a career change, sudden inheritance or “windfall,” divorce,
loss of spouse or aging/incapacity issues, being mindful of this inventory
can help ease transitions.
Cristin Harris Rigg, CFP®, CDFA® is a certified financial planner
and certified divorce financial analyst with Harris Financial Advisors,
Inc. in Torrance. She is also a member of the Torrance Memorial
Professional Advisory Council.
www.harrisfinancial.net. (310) 791-3226.