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Life happens. Plan today to make every transition easier.

Life happens. Plan today to make every transition easier.

Change. For some of us, the word alone can send a wave of panic. And it’s no wonder. Any change means transition, and any transition—whether happy or sad—begins with an ending. In all cases, something or someone fundamental in your life is gone. Marriage brings the end of complete independence. Retirement brings the end of decades of camaraderie, achievement, and a steady paycheck. Divorce brings the end of a relationship, and often years of hopes and dreams. Death of a loved one brings the end of companionship and a huge shift in how you live each day moving forward. Sending a child to school brings the end of one phase of parenting. While every stage of life has its own of transitions, for many women, it’s the 40s that seem to bring on the perfect storm.

In my own life, my 40s were an utter whirlwind. Jamie and Adam both graduated from high school and moved out of the house. Both of my parents died. My husband had a major stroke. And I lost my job. All in a tiny, 5-year window of my life. And like anyone facing such transitions, I didn’t know which way was up. In his seminal book Transitions: Making Sense of Life's Changes, Bill Bridges talks about the period following a significant life change as our “time in the wilderness.” I was the perfect example. As Bridges explains it, it’s a time when we’re forced to separate ourselves from the everyday and digest and respond to the immense change within us. And all of this must happen before we can return to the world, transformed.

While you’re in the wilderness, it’s normal to feel off-balance and uncertain. It can feel like survival is impossible, and the unending stream of questions won’t stop flooding every thought. How will I live? How will I pay the bills? How can I move on? While it may seem impossible at the time, it’s important to recognize that you will find your way. But even as you’re struggling, you must make sure the rest of the pieces of your life don’t fall apart.

I often say that when it comes to your money, there’s no such thing as an unexpected expense. The same is all too true when it comes to “unexpected” changes. Once you reach your 40s, 50s, and beyond, big changes come flying at you, fast and furious. Your children grow up. Your parents get elderly. Your aging body begins to throw you curve balls. You get sick. Your spouse gets sick. Life happens! The good news is that because you know all these things are going to happen, you can prepare for what’s to come—long before you’re thrown into the wilderness. Here’s how to start planning for tomorrow’s changes today:

  • Identify your “person.” In times of crisis, it’s vital to have someone who can give you an outside perspective and help guide your way. It may be an adult child, a colleague, a neighbor, a family member, or a best friend. Whoever you choose, your person is the one you know you can trust to be there when you need help and is the one who makes you feel safe—even when you’re in the wilderness.
     
  • Create a solid financial plan. All transitions create an imbalance in your life. By working with a trusted advisor now to create a solid financial plan that is stress tested for change, money will be one thing you don’t need to worry about when life happens. Even more, you won’t be starting from scratch after the storm. Instead, you’ll know precisely what your resources are moving forward. That alone can help breathe easier throughout the transition process.
     
  • Prepare for the inevitable. Like it or not, change is going to happen and your life will be filled with a series of transitions. The kids grow up, move out, get married, and have babies of their own. Parents get old and pass on. Jobs come and go. Marriages shift. Be honest with yourself about what changes you’ll face in the next decade… and the next… and prepare yourself emotionally and practically for what’s to come.
     
  • Create a community of friends. Emotionally you may feel isolated in the wilderness between the end of one thing and an eventual new beginning. Isolation leaves you vulnerable, so prepare now to engage in community by being a friend, a volunteer, or a member of a church, book club, or card group. The circle of friends you build will be your emotional life raft in the future.

Of course, you cannot anticipate every transition. The worst day of my life was when my first husband left me. My kids were three and five years old. I was a recent West Coast transplant and a stay-at-home mom. I had no job. I had no future. I couldn’t breathe. I couldn’t swallow. I had been thrown into the wilderness and trapped inside a bell jar. When my attorney Sheila Sonenshine told me to breathe, I listened. I inhaled. I exhaled. Again and again. She told me to get a haircut and get a job, and I did that too. Before I even realized it, I was putting one foot in front of the other and moving forward. With her guidance, I found my way out of my wilderness.

When the big changes hit—whether you’ve prepared for them or not—remember to make these your top three priorities:  

  1. Breathe. You’ll feel stuck. You’ll feel blinded. You’ll feel off-balance. But if you can remember to keep breathing, you can (and will) keep moving forward.
     
  2. Identify what’s urgent. Pay your bills. Be realistic about your finances. Take care of the necessities and put everything else on hold. And wait to make any irrevocable decisions until you’re able to see straight again.
     
  3. Get “up on the balcony. ”Count on “your person” to help you scan the environment, see the realities of your situation more clearly, and keep you rooted in what’s real. Don’t forget about your financial advisor. She can help you circle back to your plan so you can rise above your emotions and make rational decisions.

No matter what life throws at you—and no matter how unexpected the expected can feel—you too will find your way through the wilderness. The best thing you can do until you get to that next fork in the road is to put plans in place that help make even the toughest transitions easier. And when life happens and you need a guide to help find your way, we’re always here to help. 

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Facing divorce? 5 tips to protect your financial future

Facing divorce? 5 tips to protect your financial future

I don’t think there’s anyone among us who doesn’t have a story about 2008. Whether you lost a significant chunk of your retirement savings (at least temporarily), watched your parents struggle, or saw your colleagues panic and your friends lose their homes, it was a devastating period. The market has been volatile ever since even as it slowly and surely climbs to new highs. However, there’s a situation many people—especially older couples—face all the time that has the power to bring on even greater long-term financial devastation. What is this monstrous risk? Divorce.

Denise emailed me last week, and I was surprised to hear the elation and relief in her voice. “I’m finally doing it,” she said. “I’ve wanted a divorce for years, but I finally got the courage to make the leap. Even better, Doug feels the same, so I think it will be pretty easy. Amicable even.”

Before the words were out of her mouth, I felt my stomach drop. I hated to burst her bubble, but I also know the reality all too well. When couples divorce, no matter how “amicable” the situation may be, financial distress is inevitable. Add even the slightest bit of hostility to the mix, and you can be sure that distress will increase.

While I wish there was a way to ease the road ahead, or at least add even a tiny sugar coating, the fact is that there’s rarely a way to avoid the personal financial downturn that comes with divorce. No matter how much you’d both like a different outcome, this will be your “personal 2008.” Your assets will be divided in half. You will have two households to support, two retirements to fund and, if children are involved, two “family” vacations to pay for—all further compounded by legal fees to iron out custody details on top of everything else.

Don’t get me wrong: I would never wish for anyone to stay in a marriage only for financial reasons. Life is too short for a couple to stay in a non-productive, dysfunctional relationship. However, the sooner both parting parties face the fiscal realities of divorce, the sooner they can begin to make the appropriate adjustments to move forward financially. It’s a tough mandate considering the emotional turmoil in motion, but it’s a must.

Rather than breaking the news to Denise on the phone, we scheduled a meeting to look at the details. When we sat face to face, here’s what I shared:

  1. Be prepared for a lifestyle change. I’ve seen people stuck in faulty assumptions, unable to let go of lifestyle changes, even keeping an unaffordable house “for the kids’ sake.” Often, downsizing in every way is not only optimal, but mandatory. If your happiness is based on living in the same place and affording the same luxuries, you’re in for a rude awakening. This shift is huge, and you need to understand the ramifications at the outset.
     
  2. Be realistic about your budget. Yes, this includes supporting two households, and that will eat up a major chunk of any expendable income, but mortgage and rent are not the only factors. As soon as you have a clear picture of your monthly income, you’ll need to create a budget that matches that number to avoid an increase in debt due to overspending.
     
  3. Include retirement in your planning. Couples who remain together can anticipate the reduced expenses that come with a single dwelling and shared expenses. Going solo means you’ll need even more to support your non-earning years. If you’re over 50, consider making “catch-up” contributions to your retirement. If that’s not possible, at the very least, be sure you are contributing every month to help ensure you don’t outlive your assets as a single.
     
  4. Don’t count on the promises of your attorney. While I do hope that most divorce attorneys are striving to act in your best interest, we’re all optimists at heart and, even more so, some attorneys will tell you only what you want to hear. Wait until your case is closed to spend money that’s not yet in your pocket. Once your Marital Settlement Agreement is final, you’ll have an accurate sense of your financial capacity. Until then, keep your wallet closed as much as possible.
     
  5. Keep an eye on the details. If you’re on your spouse’s health insurance plan, those benefits may end when your divorce is final. If you decide to sell your home post-divorce, you may face capital gains taxes if the appreciation is greater than $250K. However, if you sell “incident to divorce,” you and your spouse may both qualify for a $500K exemption from capital gains instead of just half that amount. (A transfer is incident to divorce if it occurs within one year after the marriage ceases, or if it is related to cessation of the marriage.) Details add up and have a major impact on your financial health—now and down the road. Work with a professional advisor to be sure you know which decisions matter most, and when.

When Denise and I finished talking, she wasn’t on the same cloud nine. Reality checks are rarely comfortable. But she did tell me she felt much more prepared for what was to come. “It may not be as easy as I thought it could be,” she said, “but I’m still certain we’ll all be happier over the long term. I know I have some serious homework to do!”

If you’re facing divorce, I urge you to take a close look at your finances and make the best possible decisions as you walk this new path. Whether you’re wearing rose-colored glasses or are mired in the common distress and shock of it all, taking time out to review the money side of the equation may make it much easier to find joy as you enter a whole new phase of life. 

Need help working out the financial details of your divorce?  This email address is being protected from spambots. You need JavaScript enabled to view it.  me to schedule a confidential session. As always, I’m here to help.

 

 

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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >