By Mike Ptaszenski, CFP®, MBA

When your life changes in a significant way, whether you have lost a spouse, gone through a divorce, or lost a job, one of the first things you might do is look at your bank balance. If you are asking yourself whether you are going to be okay, that number can feel like the answer. Unfortunately, it usually isn’t the answer, because it only shows you one moment, not what you have coming in and going out over the months ahead.

That figure, what you are actually living on, is where a rebuild often has to start, and it can be easy to get wrong. I onboarded a new client who had sold their business expecting the proceeds to carry them comfortably into retirement. The sale price looked more than sufficient. It was only when we re-mapped their cash flow that the real picture came into view. For many, rebuilding a financial plan after a major life change works best when you take the steps in order.

Start With What You’re Living On

For that client, what surfaced was that the business had been covering a large share of their personal costs: health insurance, phone bills, car payments, even travel that was tied to work but felt personal. Once those expenses moved onto the household ledger, their true annual spending was considerably higher than they had assumed, and the sale proceeds that looked more than sufficient no longer were.

This is why income is so often the first thing to map. What you are living on, where it comes from, and how long it might last can influence almost everything downstream: how much risk you can take, how much you can give, and when you can retire.

Fix What’s Written Down

The next step can be to revisit your property titles, beneficiary designations, and other documents. In many cases, these common issues are inexpensive to fix but costly to leave alone:

• Outdated beneficiary designations on retirement accounts and other financial accounts
• Powers of attorney or healthcare directives nominating agents who are no longer suitable
• Outdated account titles after a divorce or other change in your household structure
• An outdated tax filing status

Changing outdated beneficiary designations can be especially critical. Many people don’t realize that beneficiary designations on the accounts themselves almost always supersede what a will says.

Here’s another client scenario to consider. One of my clients created a new estate plan, placing their assets into a marital trust and children’s trusts. However, they didn’t change beneficiary designations on retirement and life insurance accounts.

Had we not caught this detail before it was too late, the funds in the clients’ accounts likely would have gone to named beneficiaries and bypassed the trusts the client had paid for.

Reassess Insurance Needs

As your household changes, your coverage may no longer fit the situation you are in. After the loss of a spouse, life insurance that was meant to replace two incomes may now serve a different purpose than the one it was bought for, and it can help to check what the policy is for and who it now protects. If you have left a job, the disability and life coverage that came through your employer likely ended when your employment did, often before you have had a chance to replace it. And if you are heading into a stretch between employer health insurance and Medicare, you may need to arrange coverage on your own for that window.

Take Another Look at Your Portfolio

Before you decide how your investments should be allocated, you should have a clear view of both your cash flow and your time horizon. Until you have those, the allocation question can’t really be answered adequately, which is why I believe the portfolio review should come later in the sequence rather than first.

A transition can also change how much risk a household is able to absorb. A mix that made sense on two incomes may be carrying more risk than one income can now support, and a large position in a single stock tends to look different once the paycheck backing it is gone. It can be worth revisiting your concentration, asset location, and how the whole portfolio is allocated after a major change, and each of those decisions can carry tax implications that are easier to manage when you look at them as a group. My colleague Missy Devlin covers the portfolio side of a transition in more depth here.

Why Order Can Matter More Than Any Single Decision

In many cases, each piece of your plan is handled by a different professional. The person managing your investments may be doing careful work, and so may your accountant and your estate attorney, and still no one is standing over the plan to see how those pieces fit together. That is frequently where things go wrong. The estate situation I described earlier is a clear example. The documents themselves were correct, but no one was confirming that the beneficiary forms matched them, and that one oversight could have undone the plan. For many clients, Thrive’s role is to be the party at the center of the whole sequence, helping to facilitate and coordinate the various moving parts.

Need Help Rebuilding Your Financial Plan After Major Life Changes?

Changes in your life don’t invalidate your past planning work. Rebuilding your plan is a process that can be made easier by applying a clear sequence, and the team at Thrive Wealth Management, LLC aims to help our clients follow that order. When you contact us, we can take a look at your current situation and help you map out a plan that makes sense for your specific needs.

Are you interested in finding out if we can help you fix your financial plan? To schedule a meeting, call (215) 376-5530 or email mike@thrivewealth.com. 

Frequently Asked Questions About Rebuilding Finances

How should I update my financial plan after a major life change?

After a major life change, such as losing a job, selling a business, getting divorced, losing a spouse, or retiring, it’s important to revisit your financial plan in a sensible order. Often, we recommend starting by evaluating your income and cash flow, then update beneficiary designations, account titles, and estate planning documents. From there, consider reassessing your insurance coverage and investment strategy so each part of your financial life can reflect your new circumstances. Following a clear sequence might help you avoid costly mistakes.

What financial documents should I update after a major life change?

Consider reviewing several documents after a significant life event, including beneficiary designations, property titles, powers of attorney, healthcare directives, and your estate plan. Many people don’t realize that beneficiary designations on retirement accounts and insurance policies often override what’s written in a will. Thrive Wealth Management helps clients review these critical documents as part of a coordinated financial planning process, helping to prevent important details from being overlooked.

Should I work with a financial advisor after a major life change?

Major life changes often affect your income, taxes, insurance needs, retirement timeline, estate plan, and investment strategy all at once. Coordinating those moving pieces on your own can be challenging. The Thrive Wealth Management team helps clients rebuild their financial plan after major life changes by guiding them through the right sequence for them and creating a strategy tailored to their new financial reality.

About Mike

Mike Ptaszenski, CFP®, MBA, is a Co-Founder and Managing Partner at Thrive Wealth Management. The most rewarding part of his work is seeing clients reach milestones they once thought were out of reach. He takes pride in simplifying complex choices and providing clarity, so clients feel confident moving forward. What motivates him each day is knowing that his work directly impacts clients’ quality of life and provides the confidence that comes from having a clear financial path.

This material is provided for informational and educational purposes only, should not be viewed as an exhaustive discussion of the topics presented, and should not be construed as individualized advice for any reader’s personal circumstances. For guidance on how these matters may impact your financial plan or investment portfolio, please contact your Thrive Wealth Management, LLC representative. While the information presented is believed to be factual and up to date, Thrive Wealth Management, LLC does not guarantee its accuracy and, due to various factors, including but not limited to changing laws and regulations, this information is subject to change. All expressions of opinion reflect the judgment of the authors as of the date of publication. Thrive Wealth Management, LLC is not a law firm or an accounting firm, and no content contained herein should be construed as legal or accounting advice. Please consult with the qualified professional(s) of your choosing for legal and accounting advice.

Please visit https://thrivewealth.com/disclosure for additional information regarding the professional designations and credentials discussed. Professional designations and credentials do not guarantee success or any particular investment or financial outcome.

Past performance does not guarantee future results. All investing comes with risk, including risk of loss.