Money In Motion | 5 Critical Moments for Financial Choices & What to Do

Families and individuals have the most to gain – or lose – when money is in motion. Whether you’re building wealth or spending it, one thing is for certain: this is a critical moment for good financial choices.

Here are five common situations where you will find that your money is in motion, and what to look out for in each one:

Leaving your job

American workers leave their jobs, on average, once every 4.1 years, which means your money may be in motion due to a job change as many as 10 to 12 times in your lifetime! Whether you’re starting a new position or beginning your hard-earned retirement, leaving a job can be financially complex. You may need to move your 401(k), 403(b), or other retirement savings. You may find yourself navigating a pension buyout, partner buyout, or stock options. Your financial advisor can help you reduce your tax burden during this major money move and make solid choices to keep you on track to reach your financial goals.

Retiring

When you imagine the start of your retirement, what do you see? I’m betting you didn’t answer “paperwork.” Most people retiring today are navigating a complex system of retirement savings, Social Security and Medicare policies, and pensions. There is a multitude of decisions to be made to make sure that you can support the standard of living you deserve. Those include deciding on when to start taking Social Security payments, planning for medical care, understanding where to allocate your investments, and more. The good news is your financial advisor can help. The even better news: it’s never too early to start.

Selling your business

When passing your business on to the next generation or seeking an external buyer, it’s important to establish a clear timeline for the sale or transition and a well-planned exit strategy. Work with your financial planner to make sure you’re not paying too much tax, or even the wrong tax entirely, on the sale of your business.

Purchasing a home

For many, purchasing a home is one of the most significant money moves in their lifetime. The first step is to understand how much house you can afford. You will need to consider any special programs you may qualify for as a first-time homebuyer, hidden expenses, and savings for home repairs. Take a look at your credit score and debt-to-income ratio and make any necessary changes to qualify for the best interest rates, and shop around or work with a mortgage broker for the best loan terms. And, of course, meet with your financial advisor to create a plan to save on taxes and loan interest, prepare for unexpected changes to your cash flow (such as emergency repairs or job loss), and make sure you’re still saving for your future. Buying a home is a start to building your net worth and preparing for retirement, but you’ll want to make sure you have enough left after the mortgage payment to fund your retirement plan.

End of life

Nearly 7 in 10 Americans turning 65 today will require long-term care at some point. With median costs ranging from $1,650 to $9,000 per month, long-term care can drain your savings seemingly overnight. Meet with your financial advisor and your spouse to discuss how you will pay for care, navigate Medicare and Medicaid, and protect your assets for your children and grandchildren. Make sure you have an updated will and healthcare power of attorney in place before you need it. And, of course, discuss your care preferences with your family.

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This content is adapted from Don’t Run Out of Money in Retirement (Advantage/ForbesBooks), a new book by Allen Harris, which will be available in late summer, 2022.