Life Cycle Planning – Job Loss
From: TerryAge: 45 – 49Question: I am 47 years old and I have just lost my job. What should I do with my 401K and how should I invest it in this market?
Answer: Thank you for your question. I am sorry to hear about your job loss.Probably to smartest option for your 401K in order to preserve this valuable retirement asset would be to transfer the funds into an Individual Retirement Account (IRA). Find an institution that offers IRAs (i.e. discount broker, your bank, etc.) and request a direct transfer. This way the 401K funds will be transferred directly to your IRA, eliminating any temptation to spend it. Most IRAs offer a wide constellation of investment choices, allowing you the opportunity to build a well-diversified portfolio. Make sure to consult with an investment advisor to help you allocate the funds within your IRA according to your time horizon.
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July 21, 2009.
Your financial plan is a live document. It may not have a pulse like you do, but financial planning is a process – not a commodity. That means that your financial plan will need to be updated on a regular basis, especially as your life circumstances change. It’s about achieving your goals and planning provides the road map to get you there. A plan also prepares you for the unexpected.
Each phase in our lives adds another layer of a financial planning need. For example:
Your 20’s and early 30’s are about developing the right financial habits that will set a tone as to how you manage your money for the rest of your life. You may be planning a family, and educational savings and insurance may need to be addressed.
For those of you in your late 30’s and 40’s, it’s about balance. You’ll want to know how to beef up your retirement savings while managing your cash flow and debt.
In your 50’s is when you will want to stress-test your retirement plan to see where you stand compared to your goals.
Life cycle planning is more complex than just learning how to save for retirement, it is also about protecting your savings, your earning power and your loved ones against the unexpected.
Over the course of the coming weeks, I will break down each life cycle phase and talk about what you need to stay on track.
Denisa.
