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Avoiding U-Turns

Have you ever found yourself talking on the phone or listening to your favorite podcast while driving, and suddenly you realize you were so engaged that you completely forgot to take your exit or turn?  For any that have set out to reach a destination, this has probably happened at least once.  We find ourselves on autopilot and simply fail to notice that a change needs to occur.

In many ways, life can be similar.  We are busy living in the present, taking care of the tasks at hand, and we overlook critical junctures or changes in our route.  The cost of the U-turn depends on how quickly we recognize our mistake and the adjustment to fix it.  Consider the following:

Life Event: A change in marital status.

Action Item: Your estate documents (Will, Trust, Power of Attorney, Healthcare Directive) and beneficiary designations may need to be revised.

Cost of Waiting: Assets may be distributed to unintended heirs in the event of premature death.

Life Event: A birth or adoption of a child(ren).

Action Item: Review of life insurance needs, education planning, and estate documents.

Cost of Waiting: The price you pay for life insurance coverage is based on your age, so delaying even a year can result in an increased expense.  Due to the power of compounding interest, waiting to save money for education expenses may require more to be saved than if you started early.  Many delay revising their estate documents because they are unsure who to name as a guardian for their child(ren).  In the event you are unable to act, the courts will ultimately make this decision for you.

Life Event: A job change.

Action Item: Benefits enrollment

Cost of Waiting:  If your new employer provides a matching contribution for the retirement plan, you are giving up FREE money by waiting to enroll.  Take the time to review other benefits provided (health coverage, insurance coverage, etc.); once the enrollment window ends, you will not have the opportunity to make any changes until the next enrollment period or a separate life event occurs.

Life Event: Surplus cashflow

Action Item: Building an emergency fund and investing towards long-term goals.

Cost of Waiting: A Chinese proverb says, “The best time to plant a tree was 20 years ago; the second-best time is now.”  Again, due to compound interest, this proverb applies to investing, too.

Changes in our lives are inevitable; make them less scary by planning for them.  For every life event, it is critical to recognize the road signs and take control to avoid unnecessary delays on your path to financial security.  If you need assistance in making your map or would like GPS guidance, reach out to a Bridgeworth advisor today.