Marriage: Entering a New Investment Life

Marriage: Entering a New Investment Life

June 18, 2019

Getting married can be one of the most exciting times of your life. Here are some financial tips to help you stay on track as you plan your new life together.

Discuss financial styles before marriage. Have an honest discussion about financial habits and objectives. Are you a saver but your prospective spouse lives paycheck to paycheck? Do you prefer investing heavily in stocks, but your fiance's portfolio is filled with bonds? Do either of you know what is in your portfolios? What are each of your short- and long-term financial goals? While everyone has a different investment personality and approach, it's important you're both on the same page. If it’s overwhelming, find a financial advisor to help identify your retirement goals and establish investment strategies to achieve together. Figure out how much you need to save, invest each month, set up a monthly budget and emergency savings plan. Decide how you'll handle big purchases. Do you need to consult each other on purchases over a certain dollar amount?

Joint accounts, separate, or both? Whether you're joining finances, keeping separate accounts or a combination of both, decide early who will pay what – and from which account. Some families prefer one person control the monthly bills and budget. There is no one way to do this, but it is important to have a plan in place. Whatever path you choose, be sure you each keep a credit card in your name to maintain individual credit histories.

Review documents. Along with other legal documents, remember to update your beneficiaries on life insurance policies, IRAs, employer-sponsored retirement plans and pensions. Also, be sure to create or modify your wills. Find a financial professional to meet with annually or as often as needed to review your strategy to make sure you're still on track to meet goals and readjust if necessary. This includes reviewing beneficiaries of your IRAs, 401(k) plans, life insurance, annuities and other accounts. If you have younger children, discuss how you want to pay for education and adjust accordingly.

Think holistically. Consider each spouse's investment portfolio as part of a whole. For instance, if both you and your partner contribute to 401(k) plans and individual retirement accounts (IRAs), see how your investment choices match up. One or both of you might want to invest more aggressively if together the portfolios are conservative. Or you might find that your combined portfolio is more exposed to risk than the two of you can tolerate. Either way, you can rebalance your asset allocation by shifting money from one asset class (stocks, bonds, and money market instruments) to another or by adding new money to the underrepresented asset class.

Take inventory of your financial situation. Review your credit reports to identify and correct errors, so there are no surprises when you make a large purchase together. Evaluate your medical plans to determine if one policy is more economical and comprehensive. Add your spouse and any dependents to your health insurance and cancel unnecessary policies as appropriate. If you have any outstanding loans, develop a plan to reduce or eliminate that debt. If you own a home and plan to live there for five or more years, consider refinancing if it will be beneficial. You should also make sure you both participate in an employer-sponsored retirement plan ‒ at least enough to receive an employer match, if offered.

Determine your tax status. Once married, you'll need to ask your tax professional whether it's best to file your taxes jointly or separately. Usually, the "married filing jointly" status could result in a lower tax liability, but in some instances "married filing separately" may be more advantageous. If this isn't your first marriage, discuss your Social Security benefits with your tax professional. Your benefits may be impacted if you're under age 60 when you remarry. If one or both of you will be selling a home, investigate potential tax consequences.

Make a list of professionals. Select the financial advisor, tax professional and legal professionals you both want to work with. Having a dedicated team of professionals working for you can help ensure you stay on track to meet your short- and long-term goals.


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