Midlife Marriage -- The Perfect Time To Assess Your Financial Life
Remarrying in midlife means the consolidation of two existing lives -- and often two families -- into one. It's an exciting prospect and a chance to begin a new life. Believe it or not, this exciting time is the perfect opportunity to take a fresh look at many aspects of your financial lives and make changes for the better. Here are 5 parts of your finances that you should reassess when getting remarried.
Your Taxes
A new marriage changes both parties' taxes - often in unexpected ways. Filing your income taxes jointly can have both positive and negative impacts on both spouse's taxes depending on their prior situations. It may even be better to file separately if one partner's income greatly exceeds that of the other. You may have new minor children to claim as dependents or college expenses to deduct. You may also find that your withholding taxes are no longer adequate or are taking too much of your income. Meet with an accountant to discuss all the aspects of your new family and see how your taxes will change.
Your Retirement
While you're investigating and making changes to your accounts, this is a good time to do two things with your retirement money: rebalance and consolidate. If your retirement investments are set on auto-pilot (such as with a Target Retirement Fund or Index Fund), talk with your CPA about how they have been doing and your new spouse's risk levels to determine if you want to make any changes. Also, look for old retirement accounts -- IRAs, Roth IRAs and 401(k) accounts -- held by either spouse from prior jobs and see if you can consolidate any or all of them into your current portfolio. This will make managing your finances easier.
Your Insurance
Your insurance needs change as your family and life situation does. So make an appointment to go over your changes with your insurance agent or broker. A new spouse likely brings another car and driver that may warrant multiple-policy discounts. If you end up with two homes -- even for a short time -- be sure you have Vacant Home Insurance or Vacation Home Insurance to cover it. This is also a good time to reassess the value of your shared belongings for home insurance purposes. Have valuable items including jewelry (including that new wedding set!), antiques, collectibles and heirlooms appraised or re-appraised for current value.
Your Beneficiaries
Many account holders open accounts but fail to go through the extra steps of choosing beneficiaries unless the rules force them to. And if they do choose beneficiaries at the beginning of the process, they almost never revisit those choices to see if they are still the right decision. Your new marriage and new family members give you the perfect reason to look at all your beneficiary designations -- bank accounts, insurance policies, retirement accounts, wills and brokerage accounts -- to make sure your choices reflect your current life. Is your new spouse added and your old spouse removed? Have minor children grown to adults and been added or removed? Are any family members' ex-spouses still listed as beneficiaries? Also make sure that Social Security numbers, birth dates and name spellings are correct.
Your Benefits
Like beneficiaries, many people choose their employee benefits once and fail to reconsider many of them annually. This can result in unnecessary benefits, extra paycheck deductions and inadequate coverage. Meet as a couple with both employers' Human Resources departments to go over all the benefits each person has. Can you save money by adding family members to one person's health insurance? Is your employer-provided life insurance adequate for your new family's needs? Are you paying for old benefits or charitable deductions that you don't need or want? Are you contributing to retirement plans? And if so, is your contribution sufficient to provide for both partners' retirement needs? Working on benefits together ensures that you get the most bang for your buck.
While it's not very interesting to think about going over your finances as newlyweds, it's important and can save you both a lot of money. Getting rid of old accounts, old beneficiaries and outdated coverage will give your new family a fresh start as you move forward.