The Transition Years

The decade where everything moves at once — careers wind down, kids launch, identities shift. The money decisions of the transition years, handled before they handle you.

The Kids are Gone, Now What?

Parents, brace yourselves for a shocking figure.  The average family spends over $200,000 to raise a child up to adulthood, and that is before even thinking about college.  For as many as 20 years or more, families focus financial planning almost solely around raising and caring for their children.  Any remaining resources are generally spent on school or family activities, and creating other memories.  For many people, this is the definition of the American Dream yet the clock ticks ever forward and one day, those kids will grow up.  There will come a time when the nest becomes empty and although kids will probably always ask for money, couples are going to have to take a fresh look at their financial plan. When the destination changes, it is time for a new map.  Previous financial strategies will be rendered virtually obsolete with the shifts in spending.  Savings, insurance protection, and financial goals can all be dramatically altered.  Rather than shuffling around an outdated financial plan, a complete financial plan overhaul may just be the right solution.  Empty-nesters have many opportunities to achieve new goals, dedicate more to retirement, and expand their wealth.  See how others are finding ways to take advantage of this transition to achieve their goals.

Saving for Retirement

Depending on the individual, retirement savings and strategies range across the board.  Once kids venture out on their own, it's possible to contribute much more to IRAs, 401(k) plans, and other retirement savings vehicles. For some empty nesters, this may be the first opportunity to dedicate resources to retirement.  The good news is, there's still time to start saving for retirement.  Investment opportunities, savings options, and more can help create a viable retirement plan.  Speak to a financial advisor for more on taking a new look at your retirement planning.

Restructuring Insurance

Like the lifting of a curse, the kids are no longer your insurance obligation.  For many parents, the reaction is mixed between joy and longing for the past but once the savings kick in, the transition becomes much easier to bear.  Still, removing half or more of the covered parties from an insurance plan is more than a change, it's a dismantling of the entire strategy.   At this stage in life, it may also be important to think about insurance for long-term care or disability, or restructuring life insurance coverage.  Health insurance requirements will be markedly different as well, necessitating a modernization of your entire insurance portfolio.

Planning your Estate

Any time changes in life affect income or spending, reviewing an estate plan is recommended.  This helps ensure the strategies implemented are based on the latest information available.  Once the kids are gone there are going to be some pretty big changes in saving and spending.  This may be a good time to review trusts or consider starting one, take a look at future plans for savings accounts, and other opportunities.

Rethinking Investments

Contributing a set amount to investments each month?  With so many changes to family finances, there may be adjustments to make.  Beyond changing contributions, it might be time to think about creating a new investment strategy altogether.  There are many different avenues for empty nesters looking to invest.  Talk to your financial advisor to schedule an investment review.  Investment and savings decisions made 5, 10, or 15 years ago may be outdated in their approach and execution.  Ask about your new options and opportunities for investing.

Enjoying Yourself

You've successfully raised your children, so get out there and reap the rewards.  Speak to your financial advisor about creating a new financial plan based on your updated lifestyle.  Travel, hobbies, and more are all very possible, even while living on a fixed income.  Retirement may years in the future but that doesn't mean you have to wait to start enjoying your new financial freedom.  With the right financial plan in place, feel comfortable traveling and visiting family knowing it is already factored into the budget. There are many different investment options and strategies available to suit nearly any empty nester.  It's never too early or too late to start thinking about your financial future.  Have more time to enjoy yourself with an updated financial plan in place.   Contact a financial advisor today and start creating the right financial plan for you.   For more on financial planning, and for other intelligent financial insights, visit ProsperiFi.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Sensible Career Transitions for Professionals

An early retirement may not always be welcome. I was recently approached by two people with challenges similar to each other. Both are experienced in their fields with long careers in the energy industry.  They each have high annual earnings and years left in the workforce before planning to retire.  As happens all too often these days, their employers are replacing them with new faces - oftentimes less-experienced talent. All of a sudden, both are facing a forced and unexpected retirement. Even with a financial plan in place, this can be a crippling derailment. A career transition later in life can be frightening for anyone.  Studies show over half of Americans are unhappy with their jobs yet only 6% of those over age 451 actually make the leap. The overwhelming majority remain attached to misconceptions about late-in-life transitions, preventing action.  The average person changes jobs at least 11 times by age 451. At this point in life, many people continue to work for 15 years or longer. It's therefore reasonable to expect a couple more job changes before retirement.  Switching careers can be a positive thing, create better satisfaction, and is possible with the right plan.

Find Clarity

There are two players in the game: those choosing to look for a new career and those forced to.  For both, gaining clarity on the cause of the transition - and the effect it will have on your professional relationships - can help. The process leading up to a career transition will vary for each person. Some plan ahead, some act on impulse, and others get surprised. Understanding the root cause of the transition can help with maintaining an objective attitude.  Succumbing to emotions can cloud judgment about the next step and can affect behavior. Regardless of how a transition comes about, exiting with grace can have a lasting impact.  When a new opportunity arises, especially if there's better pay involved, it can be tempting to jump ship and take it.   Oftentimes, this happens before people consider the full impact this can have on their former coworkers or previous company.  It's possible to leave a job while maintaining strong professional relationships with former coworkers and supervisors.  A significant contributor to that outcome is engineering an exit where neither the company or your coworkers suffer as a result.

Gain Confidence

Uprooting from a lengthy career can be an unsettling experience.  Many people struggle with the thought of being a new employee again; others may face challenges finding their new niche.  To successfully transition careers at any age, it's important to adopt the right attitude. For those choosing a transition, it may be to take a new position, learn a new skill, or take a run at entrepreneurship.  Those on the unexpected journey can self-evaluate to find the right direction, or seek professional help identifying potentially marketable skills. Today, more people are switching careers than ever before. Creating a plan can help overcome the uncertainty associated with a job transition. For many people, finances are a primary source of stress.  Planned and otherwise, a job transition will likely have a significant impact on your financial plan. This can affect your decision-making and your demeanor. Gain more confidence in your decisions by speaking to a financial advisor.

Stay Committed

Job transitions are rarely cut and dry. It may sound strange but employers have been known to deny resignations.  Companies can be hesitant to lose talent and may employ various strategies to change minds. The decision to transition should weigh all the options. Clarity and confidence will help you stand by your decision to make the right move for you.  A strong commitment to your decision will help you explain, in the right words, your reasons for leaving to supervisors, coworkers, and others. At this stage in your career, you may be of significant value to your organization. Peers may rely on your skills, and junior employees may count on your mentoring them. Your exit can affect everyone in the company, all the way up to the CEO. In the age of social media burning a bridge can result in a public spectacle. To help preserve your professional relationships, help them understand your reasons for leaving.  Those ushered out the door will likely skip this challenge but for those choosing a departure, it's important to stick to the plan. A career change is an important decision. Dedicate time to planning and preparing before dropping your resignation on the boss's desk. If a decision sounds good, sleep on it. Patience will help ensure decisions are strategic and logical, rather than knee-jerk responses.  Companies have a reputation for cutting costs by replacing dedicated, long-term employees.  This may be the opportunity to start the business you've been thinking about or find a career that makes you happy. Speak to a financial advisor and discover your options.  For more on planning for financial changes and other intelligent financial insights, visit ProsperiFi.com. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Sources  https://www.bls.gov/news.release/pdf/nlsoy.pdf