Life Looks Different This Year: Here’s how To Adjust Your Financial Plan

All good stories have plot twists. And times like these don’t just move your heart; they move your money, too, creating new expenses, new risks or even new cash coming in.

This article walks you through a practical checklist of what to review so emotions don’t become costly decisions and opportunities don’t slip by.

WHY LIFE CHANGES ARE A SIGNAL TO UPDATE YOUR FINANCIAL PLAN

We intentionally create financial plans to be flexible as life unfolds. But that flexibility is wasted if life transitions don’t lead to plan updates.

How will you know if a change should trigger you to reconsider your plan? These moments of transition usually spark emotion, whether it’s joy, concern, nostalgia or sorrow. So strong feelings about something happening in your life should clue you in that you also may have hit a financial turning point. Here are some reasons why:

YOUR FUTURE MIGHT LOOK DIFFERENT THAN YOU THOUGHT

If the change is totally unexpected, it could shift your goals or timelines. And that may mean you need a different asset allocation or withdrawal strategy.

LIFE CHANGES CAN HAVE HIDDEN FINANCIAL IMPACTS AND OPPORTUNITIES

Some life changes need to be approached strategically – they can affect your tax situation, your insurance needs or your estate plan.

EMOTIONAL DECISIONS CAN BECOME FINANCIAL MISTAKES

It’s natural to want to “do something” when you’re feeling emotional, whether that emotion is euphoria or fear. But acting quickly without being strategic or considering long-term impacts can leave you in a worse situation, and sometimes it’s hard to undo.

FOR RETIREES: TRANSITIONS THAT MATTER MOST

BECOMING GRANDPARENTS

Grandparents often plan to financially help their grandchildren both now and as part of their legacy. Consider whether this applies to you and think through these questions:

• How much support do I want to give during life? Would I prefer annual gifts or a large one-time gift? How might gifting over the annual exclusion affect my estate exemption? Is a 529 plan the best approach for my gifting?
• How will this gift impact my long-term financial stability? What if I have multiple grandchildren and I want to provide the same gifts for each?
• What changes need to be made to my estate plan and beneficiary designations? What’s my plan for potential grandchildren that may be born after I’m gone? If I have multiple children, what’s the fairest way to allocate my estate among those that have children and those that don’t?

DOWNSIZING OR RELOCATING

After housing prices soared in the last few years, most home sales are resulting in an influx of cash for sellers. Ask yourself:

• What’s my plan for this cash? How much can I invest while still covering my liquidity needs? How should I invest it – can I use this as an opportunity to rebalance my portfolio?
• What are the tax implications of this sale, and how can I make sure I’m accurately reporting my cost basis to take full advantage of the capital gains exclusion?
• If I’m relocating to a different state, what are the implications for state income tax, sales and property tax, and estate or inheritance tax? What changes need to be made to my estate plan to account for different laws that could make elements of the plan invalid?

HEALTH OR INSURANCE CHANGES

Your health care coverage will change in a big way at least once: when you become eligible for Medicare. But it may not stay the same after that, as plans change coverage or even stop being offered.

And of course, you can expect your health to evolve throughout retirement. Whenever you receive a new diagnosis or a chronic condition worsens, that can affect your plan for health care spending.

Ask yourself:

• Do changes in my health or Medicare coverage mean I should choose a different plan in the next open enrollment period?
• If I’ve had health changes, do they affect my ability to cover my expected health care spending? Do they increase the chances I’ll need long-term care, and has my plan accounted for that?
• Should I hold more cash to account for potentially greater ongoing health costs?
• Does my estate plan need to be revisited because I now expect retirement to progress differently? Do I have all the appropriate designations and documents (power of attorney, health care proxy, living will, HIPAA releases, trusted contacts) in place?

A LOVED ONE’S HEALTH CHALLENGES OR PASSING

In a time of stress and sadness, your financial plan is probably the last thing on your mind. But there may be actions you should take that can put you in the best position to get through it. You may need to consider:

• If your spouse is sick and you’ll be taking on caregiver responsibilities: Do I need to adjust my budget or withdrawal strategy?
• If your spouse has passed away: How should my financial plan account for the changes in spending and income (Social Security or pension)? What changes need to be made to my estate plan once assets have transitioned to me? Will my own plans for aging need to change?
• If another loved one is ill or has passed: Do I need to make changes to my gifting strategy or estate plan?

MAJOR FAMILY EVENTS (WEDDINGS, CELEBRATIONS, TRAVEL)

For many retirees, spending time with family and friends becomes the most important aspect of retirement, and they’re happy to fund events that make that possible. If you’re planning to pay for a wedding or other large celebration, or a big, bucket-list trip, consider:

• What account should the money be withdrawn from (and what investments should be sold) in order to be the most tax-efficient? How will it affect my overall tax picture for the year, and are there strategies I can take advantage of to offset the impact?
• How will this expense affect the sustainability of my retirement income strategy?

FOR PRERETIREES: THE MOMENTS YOU NEED TO STAY ON TRACK

JOB OR INCOME CHANGES

When you’re planning to leave a job, it can present several opportunities. Consider:

• Do I need to make equity compensation decisions or exercise stock options? What will be the tax implications? Is this an opportunity to divest from company stock and better diversify my portfolio?
• Will I be receiving a severance package and, if so, how can I best use or invest the cash?
• What should I do with my employer plan account?

A big change in income (including a bonus, inheritance or other windfall) can also be an opportunity to optimize. Ask:

• What’s the best use of windfall money, and does it change my retirement timeline?
• If my income is going down, are there opportunities to convert some of my assets to Roth?

KIDS LEAVING HOME

Becoming an empty nester can often mean more flexibility in your budget. Ask yourself:

• Should I use extra cash to bulk up retirement savings or pay off debt?
• Do I want to start planning for any new goals like travel?
• Can I take advantage of catch-up contributions in my employer plan, IRA or HSA? Are employer plan catch-up contributions required to be Roth because of new income limits?
• How does extra cash or retirement savings affect my potential retirement timeline?
• Do I plan to continue helping support my kids with expenses or even a large gift as they start their adult lives?

RELOCATION OR MOVE

A move, especially a long-distance move, can have a bigger impact than you’d think, presenting both challenges and opportunities. With housing making up a large portion of most people’s net worth, it’s important to think through all the angles. Make sure you’ve considered these questions:

• Should I get a mortgage or pay for my new house in cash? If I get a mortgage, what should I do with the cash from selling my home?
• If the combination of higher housing prices and interest rates will result in a significantly higher monthly payment, how does it affect my retirement preparedness and timeline? Do I need a larger emergency reserve?
• If a larger portion of my net worth is now tied up in my home, should that drive changes to my investment allocation?
• What are the tax implications of my home sale, and how can I make sure I’m accurately reporting my cost basis to take full advantage of the capital gains exclusion?
• If I’m relocating to a different state, how might cost-of-living changes affect my financial situation? What changes need to be made to my estate plan to account for different laws that could make elements of the plan invalid?

CONSIDERING EARLY RETIREMENT

People move up their retirement dates for all kinds of reasons, from simply being ready to facing health challenges to experiencing layoffs. In addition to the job change questions above, you should ask yourself:

• Do I understand sequence-of-returns risk and how bad markets early in retirement could affect my overall retirement security? Does my retirement stress test support my readiness?
• Do I know my plan for health insurance during the gap before Medicare kicks in and what it will cost?
• Would early retirement change my optimal Social Security timing?
• If I’m eligible for a pension, would early retirement change my payout? Do I know my payout options and how to optimize them?
• Do I have an updated income and spending plan postretirement?

CHANGING MARITAL STATUS

If you’ve recently gotten married or divorced, your financial plan almost certainly should be updated. Think about questions like:

• Do I still want to stay on the same retirement timeline?
• How does the change affect my income and expenses?
• How does it affect my estate plan? Do I have outdated beneficiaries and agents?
• How does it impact my plan for aging? Does it change my insurance needs?
• Have I reviewed how the marital status change might affect my Social Security qualification?
• Do I understand how my new marital status will affect my tax situation?

FINANCIAL CHECKLIST AFTER A LIFE EVENT

STEP 1: CHECK WHETHER YOU’VE RECENTLY EXPERIENCED (OR SOON WILL EXPERIENCE) ANY OF THESE LIFE EVENTS

• A relocation or move
• A job change or other income change
• A change in health
• A change in marital status
• The birth or passing of a loved one
• A change in financial goals
• Major spending shifts

STEP 2: ASK YOURSELF THESE 6 QUESTIONS

1. Does this change the money I have coming in and/or going out?
2. Has the risk I’m comfortable with changed?
3. Have my goals changed?
4. Are there implications for my estate plan?
5. Could this affect my tax situation?
6. Are there any connections to home, health or life insurance?

STEP 3: CONFIRM YOUR PLAN STILL ALIGNS WITH YOUR GOALS

Talk to your financial advisor about how retirement planning could look different after major life events. Together, we can review your:

• Withdrawal strategy
• Goals progress and timelines
• Asset allocation
• Diversification
• Cash balances and needs
• Estate plan
• Tax strategies
• Insurance needs

STEP 4: TAKE ADVANTAGE OF POTENTIAL OPPORTUNITIES

Some life events, like those that result in a cash flow boost or lump-sum influx, can be an opportunity to make progress on your goals or add new ones. They can include:

• An inheritance
• A home sale
• A severance package or company stock sale
• A lump-sum pension payout or rollover
• A divorce settlement

Your advisor can help you decide how to best put that money to work, considering tax implications and your goal priorities and progress – without adding undue complexity or fees.

WHY ACTING DURING A TRANSITION CAN STRENGTHEN YOUR LONG-TERM POSITION

Major life changes open a window where proactive planning does the most good and waiting often costs more. Use this moment to coordinate taxes and withdrawals, manage risk and simplify your financial life so it’s easier (and less expensive) to manage. You don’t have to do it alone; your advisor can help you assess your situation, evaluate trade‑offs, identify the right next steps and move forward with clarity.