Navigating your financial independence often involves overcoming challenges, especially life transitions. Sometimes, navigating life’s changes can be difficult. We welcome events such as watching a child graduate or pursuing a lifelong passion with open arms. However, more significant challenges come with the loss of a spouse or through divorce. Importantly, each new beginning carries with it an opportunity to redefine our lives and our financial independence.
My work with women experiencing these pivotal changes shows they have some shared goals. They want to feel secure, empowered, and in control of their finances. Feeling confident is especially true for those stepping into a new chapter alone for the first time in years, if not ever. In this post, I’ll share key steps to help you as you embark on this journey. When navigating your financial independence, you want to maintain your focus and do so with confidence and clarity.
1. Laying the Foundation
Navigating your financial independence starts with understanding your current financial position. You want to know your net worth. Begin with a clear inventory: What do you own, and what do you owe? Gathering this data may initially feel overwhelming, but it helps lay a foundation.
A simple list of your assets (such as your home, retirement accounts, investments, pensions, and savings) and liabilities (like any outstanding debt) can provide clarity. If you are unsure where to begin, consider contacting a financial advisor such as Apprise, who can help you organize these details and build a comprehensive financial picture.
Next, think about your financial goals. What do you want to achieve in the next five, ten, or even twenty years? Whether you wish to stay in your home, travel, support a cause, or enjoy a comfortable retirement, having a clear life vision can guide your financial decisions. Take five minutes and write down your top three priorities for the coming year.
Women in transition often hesitate to focus on their financial goals, especially those who have spent years prioritizing family or others. Remember, this is your time to create a plan reflecting YOUR values and dreams. We can help you create a life plan that aligns your values with your TEAM of capital – Time, Energy, Attention, and Money. Doing so can help you live your most fulfilling life.
2. Create a Budget That Works for You
Budgeting is about knowing where your money goes and ensuring its use aligns with your values. You don’t need to over-complicate it. Instead, start by tracking your monthly expenses, breaking them into essentials and discretionary spending. You want to ensure your outflows don’t exceed your inflows. This process alone can bring peace of mind.
There’s power in understanding your spending patterns and adjusting as needed. You might even find areas where you can save or redirect funds toward new goals. For women facing life changes, a budget can help you adapt to new circumstances while keeping financial goals on track.
3. Prioritize Building Your Emergency Fund
An emergency fund provides a safety net. It gives you a cushion should an unexpected expense or life event arise. I recommend setting aside cash equaling at least 3-6 months of essential expenses.
If that feels like too much to ask, start small. No matter how modest, each contribution builds your financial security and confidence. Having this fund in place means avoiding relying on credit or disrupting your other financial goals in times of need. For some tips on how to get started, please read this blog (link to Pay Yourself First).
4. Embrace Lifelong Learning About Finances
Focusing on empowering yourself through financial education while navigating your financial independence can lead to a gift that pays off repeatedly. As you enter this new life phase, try learning about financial topics that interest you or could impact your future. Whether it’s investing basics, understanding Social Security benefits, or exploring estate planning, knowledge is power.
Resources like online articles, financial books, or working with an advisor who takes the time to educate you can leave you feeling more in control and more confident in your decisions. Please note that you can use the search box on Apprise’s blog page to find articles on numerous financial topics.
5. Consider Working with a Financial Professional
Navigating a significant life transition can be challenging, but you don’t have to do it alone. A financial advisor with experience guiding women through similar transitions can be an invaluable partner.
An advisor’s role goes beyond offering investment advice, especially if that advisor is a Registered Life Planner. An advisor can help you make decisions that align with your values, provide peace of mind, and give you confidence as you move forward.
Navigating Your Financial Independence: Additional Considerations for Women Over 50
For women over 50, stepping into a new chapter often brings unique financial and lifestyle challenges. By this stage, retirement, health care, and securing a legacy for your loved ones may be at the top of your mind. Here are some specific steps to consider:
1. Evaluate Your Retirement Plan
When you reach your 50s, retirement planning becomes more urgent. Navigating your financial independence takes a higher priority. Assessing whether your current retirement savings are on track to support your desired lifestyle is vital. Many women in their 50s start thinking about how long they plan to work. They also begin envisioning their retirement – whether it’s travel, hobbies, or simply enjoying a relaxed pace. If they’ve been saving for retirement, they start thinking more about what quality of retirement their savings will bring.
Consider working with a financial advisor to review your retirement accounts and discuss potential strategies to maximize your savings and minimize your tax bill in the years ahead. For example, consider making catch-up contributions to retirement accounts, reassessing your asset allocation, or exploring tax-efficient withdrawal strategies such as Roth conversions (add link).
Suppose you are facing a new beginning, including divorce, losing a loved one, an empty nest, or retirement. In that case, you can take our Flourish Though Life’s Big Changes Assessment to discover how ready you are to embrace and thrive through your significant life transitions.
2. Consider Health Care and Long-Term Care Needs
Healthcare is a significant retirement expense; planning for it can help you avoid unexpected costs later. Research your options for health insurance if you plan to retire before age 65 (when Medicare eligibility begins), and consider purchasing a long-term care insurance policy.
Long-term care coverage can help protect your savings if you need assistance with daily living activities in the future, reducing the financial and emotional burden on your family.
3. Create or Update Your Estate Plan
An estate plan ensures your assets are distributed according to your wishes and can provide peace of mind for you and your loved ones. At a minimum, review or create essential documents like a will, a health care directive, and a power of attorney.
You will want your estate plan to reflect these shifts as life circumstances change. The newly single or widowed at least need to review beneficiaries, bequests, and the decision-makers for health and financial matters.
Remember that beneficiary designations take precedence over what your will states. What happens if you leave your ex- as the beneficiary of one of your accounts? He will inherit his share of that account even if you change your will (This article provides an extreme example of what can happen when you don’t update your beneficiaries). Working with an estate attorney can help ensure your plan is up-to-date and aligns with your goals.
4. Plan for an Active, Purposeful Retirement
Many women over 50 envision retirement as a time to pursue passions, learn new skills, or even start a second career. Financial independence goes hand-in-hand with finding meaning and purpose in this stage of life. It’s about more than just navigating your financial independence. Aligning how you use your resources with your values can improve the quality of your life both now and in retirement.
Think about what would allow you to live your most fulfilling life. Go beyond financial goals. Consider community involvement, mentoring, or a new hobby. As you move forward, these pursuits can bring fulfillment and mental well-being, adding joy and satisfaction to your life. Incorporate these goals into your life plan if they require a financial commitment.
5. Maximize Social Security Benefits
For those approaching retirement age, it’s worth exploring Social Security strategies. Deciding when to claim Social Security is an important decision. It can significantly impact your monthly income. For example, your benefits increase by 8% annually (2/3% monthly) from full retirement age (67 for those born in 1960 and beyond) until age 70. A financial advisor can help you weigh the pros and cons of different claiming decisions based on your situation, including any spousal or survivor benefits you may be eligible for.
Moving Forward and Navigating Your Financial Independence
Financial independence is a journey filled with learning, growth, and resilience. Life’s transitions allow us to rewrite our stories and build lives that are genuinely our own. For women facing new beginnings, financial independence is about security and the freedom to live fully and flourish.
No matter where you are on this path, remember that each step brings you closer to a life of confidence and financial empowerment. You can shape your financial future – why not start now? Schedule a call to discuss how Life Planning can cascade your financial goals throughout your life.
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
