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9/22/2015

5 Life Events Clients Should Include in Their Financial Plan

When helping your clients create their financial plans, it’s important to consider major life expenses in addition to daily expenses. Depending on what stage of life your client is in, some major life events might be hard to think about because they seem far away or maybe they’ve already passed. Either way, make sure you help your clients plan for any of these five life events.


Marriage


Aside from whether or not your clients are paying for the wedding themselves, there are other financial aspects that need to be considered before tying the knot. First thing to consider is how - or if - the couple will join their finances. Will they open a joint bank account? Who will be responsible for the bills? They’ll also have to decide if they will file taxes jointly, change insurance and determine estate beneficiaries.


It might be uncomfortable to discuss, but if one or both of your clients brings a large amount of money or a business to a marriage, a prenup might be in order. Your clients might not want to start thinking about their marriage ending before it even begins, but a prenup will simply protect each individual if the unthinkable happens. If your clients do decide sign a prenup, make sure they both have separate legal counsel.


Moving


If your clients find themselves moving to a different state, make sure they are prepared for any cost-of-living differences in their new state. This can sometimes come as a shock to people after they move. As their financial advisor, educate them on things like differences in state income tax, estate tax, power of attorney requirements and how their assets are protected from creditors.


Inheritance


Whether an inheritance is unexpected or not, suddenly coming into a lot of extra cash or valuable assets comes with great responsibility. Your clients might find that concerns are raised about their taxes, spending habits and more. To make the most of their new wealth, advise them not to make any big or rash decisions like quitting their job or making major purchases right away. Instead, encourage them to think about the future and paying off debt, investing in retirement savings or saving up for a college fund. Also help them explore different investment options that will make their new cash work for them and bring in some extra income.


Children


According to CNN, the average cost of raising a child to age 18 is over $200,000, depending on family income and location - and this cost doesn’t include inflation or paying for college. It doesn’t matter if it’s their first child or their fifth, anytime a new baby comes into the picture, it majorly changes the family finances. This is especially true if one parent chooses to leave their job and stay at home with the kids, leading to a decrease in income.


Retirement


Studies show that people could spend 20 years or more in retirement, so it’s important to start planning and saving early to make sure enough funds are available. Help your clients their retirement options that will best maximize their cash flow and that best fit their needs. It’s also important to plan for things like unexpected medical expenses.


To learn more about how to best advise your clients in planning their finances, register for one of our webinars today!



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