Are you ready to take control of your finances during life's most pivotal moments? In this episode, we dive into the complex world of financial decision-making during key life events. From the excitement of marriage and the joy of welcoming a new child to the challenges of divorce and the loss of a loved one, we'll provide practical tips and guidance to help you make informed decisions and maintain financial stability.
Important Links
Website: http://www.yourplanningpros.com
Call: ...
Are you ready to take control of your finances during life's most pivotal moments? In this episode, we dive into the complex world of financial decision-making during key life events. From the excitement of marriage and the joy of welcoming a new child to the challenges of divorce and the loss of a loved one, we'll provide practical tips and guidance to help you make informed decisions and maintain financial stability.
Important Links
Website: http://www.yourplanningpros.com
Call: 844-707-7381
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Transcript Of Today's Show:
Speaker 1:
Welcome into this week's edition of the podcast folks. Thanks for tuning in to Plan With The Tax Man. Always glad to have you here as Tony and I talk investing, finance and retirement, and we're going to talk about some key financial decisions during major life events. So I've got several of these. We'll try to get to as many as we can, but it's always important to kind of try to keep a level head through major life events, and we know that's usually not possible in many cases. So that's where I think having an advisor in your corner, having a quality professional there can help you when dealing with some of these things. So we'll have Tony highlight some areas to think about from that financial standpoint during these. Tony, what's going on buddy? How are you?
Tony Mauro:
I'm doing well, thank you. Summers in full swing and trying to enjoy it. Weather's good.
Speaker 1:
Yeah, there you go. Exactly. I know that you've been doing this obviously a long time and you've seen lots of different scenarios and situations, so it'll work pretty well I think for you to kind of give us some things to think about, whether they're positives or negatives, right, some of these life events here, some are positives, some are negative, and just some financial highlights to make sure that we're thinking about should one of these things happen to us, because many of these on this list are going to happen to probably all of us along the way somewhere. And some of them hopefully will not, but it's possible. So let's go through and have you give us some highlights, shall we?
Tony Mauro:
Okay. Sounds good.
Speaker 1:
All right, let's jump in here. We'll start with me. I know you primarily are listening audiences, retirees, pre-retirees but you do have some younger clients as well, and so maybe it's a first marriage. Right. So let's start with marriage and just say there's definitely things you want to consider and think about when you're younger, even if you got married later in life. I was 33 before I got married, the first, well, I've only been married the one time, but started to say the first time, it's only been the one time, but I was 33. Right. So I was already fairly established. So there's things to think about whenever you're jumping into that.
Tony Mauro:
There is. And marriage for a lot of us is, it is eyeopening, like you said, in a lot of ways and some of this financial stuff, nobody really talks to you about. And so I'm glad we starting with this one because my own son got married last year at 26,
Speaker 1:
Okay.
Tony Mauro:
And so he's had to go through some of the stuff and we had kind of some of the same conversations because there isn't just some book out there, you could just go read and have it all down, and none of this really is necessarily black and white, right or wrong. It's just different ways to do things. But one of the biggest ones, and one of the first ones is, is now you've got generally, especially if you're younger, you've got two people working. So you've got two sources of income. So it's all about the finances and what are you going to do. Now you've got one set of bills, who's going to pay them?
Are we combining our money and paying everything out and then we spend the rest, or that's what I get a lot. Others come to me and say, well, he's going to pay these bills, I'm going to pay these bills, and then the rest we'll decide what we want to do. So I think that's a big thing because that's hard for a lot of people whether you're going to, especially if you've, maybe you are a little older and you used to living on your own and just paying all your own bills.
Speaker 1:
Yeah. Yep.
Tony Mauro:
And do we have a joint account? Do we have two separate accounts? I think that's key. If you say, well, what's your opinion? If you asking me my opinion,
Speaker 1:
Right.
Tony Mauro:
I tend to lean towards the joint account because I think now you're one team, you're one. Right. And everybody needs to be involved. It's not like the old days where all the guys paid all the bills and the women stayed home and cooked type of thing. I mean,
Speaker 1:
Yeah.
Tony Mauro:
Both people are usually working.
Speaker 1:
Yeah. They definitely are. I think the modern era too, though, it's definitely, so my wife an I, Tony, we are completely separate on everything. Now, both of our names are on the house, but I pay the mortgage, but she pays all the utilities and she pays the insurance. So I think you can do the, and again, I was 33. Right. And she was already 30. Right. So we had been paying our own bills and having our own life. So I think it's either scenario, if you're a younger couple, maybe the joint thing is probably the way to go because you're definitely combining, probably not making as much and so on and so forth. But I think as long as you're honest and talk with each other, you can find a balance with either system, but make sure you do find the one that's right for you. Right. So because we all know marriage is the number one, or I mean, money is the number one fight in a marriage, right?
Tony Mauro:
It is.
Speaker 1:
Yeah.
Tony Mauro:
It is. And I'm not saying one's right or wrong.
Speaker 1:
No, no, not at all. Just point counterpoint. Yeah.
Tony Mauro:
Yeah. Yeah. And I think with either way you go after the bills are paid, however you're going to pay them, I still think it needs to be a team effort of sitting down saying, okay, hopefully you've got some left at the end of every month,
Speaker 1:
Right.
Tony Mauro:
You've got some positive cash flow.
Speaker 1:
Yeah, exactly.
Tony Mauro:
And then you both decide what to do with it rather than, and I've had a few couples fighting in my office through at tax time that don't do it that way.
Speaker 1:
Yeah. Yeah.
Tony Mauro:
That the guy makes a lot more than his wife and she wants stuff and he's saying, well, I already pay my share of the bills. That's your problem.
Speaker 1:
Yeah, that's a tougher, yeah, that's a tougher road. Yeah.
Tony Mauro:
Yeah. That's not the team approach. So,
Speaker 1:
No.
Tony Mauro:
Again, it takes some discussions, some maybe compromise and come up with something for you both because at the end of the day when we get back, because we've been talking a lot about retirement planning lately and decided to mix it up today.
Speaker 1:
Sure. Yeah.
Tony Mauro:
Hopefully you've got some money left. And so both can save for your goals I think.
Speaker 1:
Yeah, and I think even for our strategy, we had those conversations going into it ahead of time, and we both for a while she made more than me. And then in the last 15 years we've pretty much just been right there neck and neck. One will go up a little bit, the next one will go up a little bit. So I think that can certainly lend a hand to that lack of frustration as well. But as long as you have those conversations that are honest with each other ahead of time, then hopefully you can work your way through that. And actually we'll go right into the second one because it's remarriage. Okay. So a lot of our audience is older, maybe retirees or pre-retirees and gray divorces have been a huge thing. So maybe you're getting remarried at a later stage in life. Certainly more challenges here because you do have more things to try to combine.
Tony Mauro:
You do. There's a lot of big challenges here, unlike the first marriage with the younger people, so to speak. But just like you're saying, many of these people that are getting remarried have families, they have other concerns, especially the kids. And they've been through this before and now all of a sudden their needs are a little more, what I find with people coming in for remarriage is a little more self-focused, self-centered, if you will. It's like, well, my money's my money. We're getting remarried, but you have kids, maybe I have kids and I need to take care of these guys first and kind of then us. And so I think a lot of discussion needs to be made there about whose valuing what and how. And,
Speaker 1:
Yep, great point.
Tony Mauro:
Yeah. What kind of things you're bringing into the marriage too. A lot of people bring old tax debts into marriages, and so I think that needs to be discussed because obviously an innocent spouse may not want to be drug into a prior tax situation and have some of their money maybe taken for that.
Speaker 1:
Especially if you didn't disclose it. Right.
Tony Mauro:
If you didn't disclose it.
Speaker 1:
That's not good.
Tony Mauro:
That's not good. No. That's never a good recipe.
Speaker 1:
That's right.
Tony Mauro:
But there's things too, now you've got, again, second marriage, you definitely have to take a look at your own retirement plan. You might have two separate ones, beneficiaries, making sure those are updated, making sure insurance policies are updated properly. And then of course, the last thing is at the end with estate planning, which I've seen a lot of families get into huge fights about estates and whatnot. And potentially, for example, a gentleman that came in a couple years ago, he had remarried. His former wife died, remarried, but he was going to leave all his money to his new wife and the kids were just absolutely out of their minds with that. And,
Speaker 1:
Yeah, that's tough.
Tony Mauro:
Really caused a lot of animosity.
Speaker 1:
Oh, yeah. It'll fractures some things, that's for sure.
Tony Mauro:
Yes.
Speaker 1:
So.
Tony Mauro:
Yeah.
Speaker 1:
There's some definitely good things to consider. Maybe a prenup is something that's worth having a conversation on either situation of those. And again, it's all about having those chats before you go through these major life events. So since we're in this realm, let's just go ahead and go with divorce next. As I mentioned, gray divorces, especially for our demographic is higher and higher on the rise, which is just kind of mind-boggling to me. But people over 50 are getting divorces more. And so what's some things to think of here? You touched on a couple, but give us some things to think about from a financial standpoint.
Tony Mauro:
I think the one thing is, is in most states you're going to be dividing up your assets. And so that's a source of real contention in a lot of cases on how that's going to be done. And again, with divorce, I'd say with all of these, you should talk to some advisor. Divorce, obviously,
Speaker 1:
You need a lawyer as well.
Tony Mauro:
Yeah. You need an attorney,
Speaker 1:
Yeah.
Tony Mauro:
To protect your interests and then maybe your financial advisor. But in our realm on the financial side,
Speaker 1:
I was going to say Tony, that's a good point though with the financial side too. Right. People might think about a divorce and they think, well, I just need a lawyer, right? Well, no, especially if you're older because now you're talking about dividing possibly retirement accounts, a 401ks, the home. I mean, maybe there's rental property. I mean, there's lots of stuff to have to divide.
Tony Mauro:
There is. And on the finance area with us, a lot of people will say, well, since I'm getting the home, I had to give my now ex-spouse half of my retirement. Well, that comes back into our room a little bit. It's like, okay.
Speaker 1:
Sure.
Tony Mauro:
Well now you just half your retirement left. Yeah, you have a home, but you're going to have to live in that. That's not going to throw off any income. What are we going to do? How's our plan changed now going forward? And so you have to re kind of engineer the financial plan and maybe your goals need to be readjusted as well.
Speaker 1:
Indeed. Yeah, I mean, because you're going to have to reset this up, you're going to have to look at, okay, what's the shortfall now that you've lost maybe half or whatever the case is, especially if you're getting closer to retirement so. And you'll want to make sure, just kind of like with the other one, you want to make sure that you've updated any kind of documents and paperwork that you need to do as well. Not leaving off, removing the old spouse or updating all the documents, powers of attorney, all that stuff. Right.
Tony Mauro:
All that stuff. Yeah.
Speaker 1:
Okay.
Tony Mauro:
And again, a good attorney and your advisor's going to be able to help you a lot there.
Speaker 1:
Yeah, definitely. All right, so let's go to a job change. How about this for a major life event, right, especially if we're getting closer to retirement and whether we are asked to step away, whether the job change is not our doing or it is our doing, give us some big things to think about here. And obviously a lot of this is going to come back to possibly being laid off or downsizing. This is the kind of thing that you guys typically see as financial professionals is in that scenario where someone's on that cusp of retirement and they're maybe looking at being laid off. And now they got to figure out, well, okay, should I just go into retirement early or do I need to find another job?
Tony Mauro:
Right. And today, so many people don't stay like the old days, 30, 40 years at the same position. Everybody's moving around and the bigger companies consolidate so much that it's not uncommon. You're here one day and the next day ask you to leave just through cutting or whatever they're doing. But I think that on the financial side, a couple of things. One is if you're departing and getting a severance or some other large sum of money, how is that going to play out for taxes, number one.
And then how is your financial plan going to be affected by that? In other words, if you're out of work for a long time, do you have the necessarily emergency fund or you're going to have to use the severance for that? A lot of times people, and I've just had this with a friend of mine who he was actually asked to leave after many years and they gave him a huge severance, like $800,000, but he is mid 50s and he's scratching his head saying, well, I don't really want to retire, but I don't think I can go make the money I was making in my 50s.
Speaker 1:
Right. Yeah.
Tony Mauro:
And so he's kind of, well, what am I going to do with myself and what am I going to do for new opportunities type of thing. And so he's struggling a little bit with that and what he wants to do there. And then really too, the next one really is now you've got retirement accounts potentially at the old employer. What are you going to do with those? You're going to leave them. Maybe they'll force you to take them elsewhere. Talk to your advisor about that because you definitely want to explore that. And then I think that the toughest one, and I get this all the time as well, like you were saying earlier, I'll think I'll just call it quits now.
Speaker 1:
Right.
Tony Mauro:
I just had one of my business owners in last week and he's young, he's 51 and he thinks he can retire. And I said, well, let's look at the numbers because I said, I frankly, I don't think you can. I said, I do your finances. Unless you're thinking of maybe really cutting back, I think you're going to run out of money probably by the age of 75. And I don't think I've convinced him yet.
Speaker 1:
Well, but that's a great point though, Tony. And that's what an advisor brings to the table. Right. So this is the guy's wish, this is his wants, he's on this cusp here, and it's your job to be that sounding board to go, okay, let's run these numbers and see. And I'm not going to sugar sugarcoat it. I don't think you're going to make it. So let's look at, we got to make some tweaks.
Tony Mauro:
I got to make some tweaks. And I told him, you're going to have make some tweaks to your spending. And he is conservative, so I said, you probably can do it, but you've got to understand what you're going to have to cut and know that you may run out of money, which it doesn't seem to bother him. I like, well, I'll just go do some work. Okay, I'll run out of, if I do I do.
Speaker 1:
That's a tough one though. Right. Because it's like, okay, I'm going to cut some things to make these numbers work to get into retirement early, and are you really going to be, like that feels like a shortsighted goal, right?
Tony Mauro:
It does, yes.
Speaker 1:
The first five years you might be totally like yes, I made the right decision, this is great, but as your quality of life stays diminished or you're not able to do some of the things you want to do, then now you've regretted this decision and you aren't, look like it or not, ageism happens out there in the workforce. Right. It's not supposed to, but it does. And it's going to be harder to get back in and maybe do the same exact thing or whatever. And I think you said he's self-employed. So maybe there's a difference there, but still.
Tony Mauro:
Well, I think in his case, because he's self-employed the conversation I had with him is, if you have to go back to work, what are you going to be skilled enough to do at that point?
Speaker 1:
Yeah. Unless it's the exact same thing he's doing now, right.
Tony Mauro:
Yeah. Which I don't think he could do. And I just said, you got to think about these things.
Speaker 1:
That's true.
Tony Mauro:
And understand what you're getting yourself into.
Speaker 1:
Well, and then medical. I'm 51 as well. I'm with him. I'd like, okay, cool. Let's do it.
Tony Mauro:
You would like to retire, right?
Speaker 1:
Yeah. But I mean, I've gotten some medical issues and that's 14 years before I can, is that right? 14 years before I can turn on social or,
Tony Mauro:
Yeah, or Medicare.
Speaker 1:
Medicare. Yeah. Right. So that's a big chunk of change too. Now maybe he's got a spouse that's going to have him covered, which this is my scenario as well. I'm covered by my wife's because I'm self-employed also, but still, that's something to consider. Right. How are you shoring up that gap medically?
Tony Mauro:
Yep. Yep.
Speaker 1:
Yeah.
Tony Mauro:
I'm trying to talk to him a little bit about just maybe doing something, even if it's just for some mad money and doing something part-time and he's entertaining that.
Speaker 1:
Pad the stats, so to speak. Yeah.
Tony Mauro:
Yeah. Yeah.
Speaker 1:
Well actually, speaking of medical, let's go to our next one then with that, Tony. And that's maybe a major life event, unfortunately, like a big medical issue or a disability. Right. So I had open heart surgery at 41. I mean, that could have gone a different way and I may have not been able to work ever again. Now luckily I've been able to. Right. But you just never know. Something could come back around or you never know what could happen, right? And so what are some things to think about if you get hit with a big medical issue or even a disability?
Tony Mauro:
Well, on the financial side, it's one of the hugest issues, is really making sure that you've got to have your situation and enough control I guess I should say that if something major medical happens, number one, how's it going to impact your financial situation and what's your insurance going to pay, what's it not. If it's going to be something long term, how's it going to impact your daily life? Even your life expectancy could be cut well short if, depending on what it is. And you've got to have some plans in case that happens, and even some contingency plans in there in case you start going down a little bit more.
Speaker 1:
Right.
Tony Mauro:
And then on top of that, you've got the mental side and the fact you've got to update policies and documents. And I think sometimes when people get hit with this, they seem real rushed. And I think there should be some urgency,
Speaker 1:
Sure. Yeah.
Tony Mauro:
To get some of this done. But make sure that you're methodically going through it. Make sure you get some advice from your advisor and then your significant other or others to come up with the best plan to make your life as good as possible for while you're here.
Speaker 1:
Yeah, definitely.
Tony Mauro:
Which is hell, what we all want to do, right? I mean, medical issues or no medical issues.
Speaker 1:
Right. And we got to definitely plan for this because like you said, there's lots of things. There's deterioration of the condition, there's updating the documents, there's even taking the time to see what kind of benefits or programs or assistance is out there to possibly help you. So lots of points to think about there, should you be going through a major life event is that. And let's do our last one, Tony. We'll wrap it up with just plain old retirement. It's like people sometimes I think forget and depending on how they're viewing it, we're so busy accumulating money to get to retirement. We forget that retirement in and of itself is a major life event. It's a total change.
Tony Mauro:
It is. And my sister-in-law's going through it right now, we're helping her. And her last day of teaching was last Friday. And so all of a sudden she's entering this new phase, and when I saw her a couple weeks ago, she happened to say, I'm not going to have any money in June. And I said, you have a lot of money, you just don't have any money coming in from work. So you got to change your mindset a little bit. So she's coming in. We're developing an income plan for her so that she's got to develop this mindset of here's how much income I've got, just like a W2, but it's just coming from different places.
Speaker 1:
Right.
Tony Mauro:
And we've got to change her strategies a little bit. So it's much more income oriented. And then work with her budget. She's conservative as well. So she knows exactly how much she's spending on everything, but you've got to understand what your monthly bills are so you can make sure you have enough for them. And then she's got some health issues too. She's got lupus fairly badly and her life expectancy probably isn't all that long. And she knows that and she understands that. She wants to make sure everything is taken care of. And we just kind of talked about that in case her health goes bad, but it is a big mental change along with the financial change.
Speaker 1:
Yeah. For sure. Yeah, I mean, there's.
Tony Mauro:
So I think you got to think about it.
Speaker 1:
Yeah, you definitely have to check all those things because it's a big gear shift. Right. So there's tons of stuff that you've got to go through when there's a major life event involved, and that's why having a qualified professional in your corner can certainly help you. So if you have not considered doing so, reach out to Tony and have a conversation about some things and get some stuff, some planning processes going with Your Planning Pros. You can find them online at yourplanningpros.com. It's yourplanningpros.com. Don't forget to subscribe to the podcast, Plan With The Tax Man. It's on Apple, Google, Spotify, all that good stuff. So you can simply type that into the search box of those apps, or again, find it at Tony's website, yourplanningpros.com. All right, my friend, thanks for breaking this down for me this week. I appreciate it. As always, have yourself a great week, and I'll see you soon.
Tony Mauro:
All right, see you soon. Thanks.
Speaker 1:
Thanks folks for listening. We appreciate your time here on the podcast. We'll catch you next time here on Plan With The Tax Man with Tony Mauro.
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