Investing During Life’s Milestones

If you recently reached a milestone — such as marriage or starting a new job — you may have thought about how it could affect your financial goals. A significant change in your life can have a major impact on your retirement plan, your asset allocation, and other financial matters.

Investors often have common needs at certain points in their lives. You may want to talk to your investment professional about the following ideas when planning your financial affairs:

When you start your first full-time job:

• Build a cash reserve — perhaps enough to meet your income needs for up to three months.
• Begin investing as much as you can afford each month for retirement.

When you receive a raise:

• If you are eligible to participate in a company-sponsored retirement plan, make a bigger contribution if you can afford to. Also, consider contributing to an Individual Retirement Account (IRA).
• Increase your cash reserve.

If you marry:

• Review your and your spouse’s investments and retirement plans, taking into account your combined income and expenses.

If you want to purchase a home:

• Invest a portion of your assets in a short-term investment to help fund a down payment along with closing and moving costs.

If you have a family:

• Increase your cash reserves.
• Increase your life insurance.
• Start investing for college costs.

If you change jobs:

• Review your investments and your asset allocation in light of your new salary and benefits. If you are eligible to participate in a company-sponsored retirement plan, try to contribute at the maximum level.
• If you participated in a retirement plan at your old job, decide what to do with the money. Options typically include leaving it in your former employer’s plan, rolling over the money into your new employer’s plan, or transferring it into an IRA.

When your children become self-supporting:

• Increase contributions to your retirement savings plan.

When you reach age 55:

• Consider changing your asset allocation to accommodate a shorter time frame as you approach retirement.

When you retire:

• If you participated in a company-sponsored retirement plan, study your options for taking withdrawals.
• Review your portfolio with your investment professional. You’ll need to strike the right balance between generating adequate income and maintaining enough growth potential to fund your later years.

Additional considerations may be appropriate regardless of your age and circumstances. For example, understanding the tax considerations of your investments can help you avoid paying more taxes than you are required to.

It’s important to note that many people’s lives don’t follow the exact milestones listed here. Establishing a long-term relationship with an investment professional can play a significant role in ensuring that your financial plan follows the seasons of your life.

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