Time to revisit financial targets

‘COVIDflecting’ has people looking ahead

I recently turned 50. It may not be as big a year as 60 for financial planning, but like all milestone birthdays, it does make you stop and think about the life that got you here, and the life ahead.

What, if any, changes do you want to make? What do you want to build upon? What can you do without? What needs to change if you want to better achieve your current and long-term goals?

In the planning world we also talk about major life events as a time to create or update a financial plan. These events typically would include retirement, unemployment, marriage, divorce, significant inheritance, a large and unexpected financial expense, serious illness or a death in the family.

Where does a pandemic fit into all of this? While it is possible that this strange time in our world may also coincide with one of those major life events, it seems like COVID-19 is bringing its own life reflection to a large percentage of people. I call it COVIDflecting. This is the adjusting of goals, values and plans based on what we are experiencing today.

Like many things with COVID, it is hard to know what will really change long term, and what is merely changed until we can go back to ‘normal’. Based on what I am reading and hearing from people, here are twelve items that can impact a financial plan, that have come from people’s COVIDflecting:

Real Estate: Do I want to stay in the city? Do I want to live in a condo? Do I need more or different space to accommodate working from home? Do I still want to own real estate in the United States?

Work in General: Do I want to keep doing what I am doing today? Is my industry falling apart and should I try to find a better option? Do I want to retire earlier and enjoy life? Do I have to work longer as my income is taking a hit for who knows how long?

❚ Eldercare: Do I want to stay in my home as long as possible? Should I move closer to family? Should family move closer to me? Can I afford to stay in my home with live-in care? How badly do I want to avoid a retirement home or long-term care? How much do I realize that I won’t be able to count on family and require external care?

❚ Travel: Will your travel shift to more domestic destinations? Maybe travel will avoid certain countries but lead you further afield? Maybe planned travel expenses will come way down as you just want to stay around home more? Maybe the type of travel will change as you want to stay in one place for longer periods of time, and less cruise-shiptype travel? What are the financial implications of all of these?

❚ Entertainment: Will we stick to a smaller group of family and friends? Will we no longer be comfortable going to big events with thousands of people? Will our entertainment world get smaller?

❚ Family and Estate: Are you thinking more about what legacy you are going to leave behind? Has your view on family changed? Do you feel closer to or further from your children? Is your goal to leave more to children than before? If so, the use of life insurance and your overall spending may change.

❚ Education: Will our education costs for our children, grandchildren and great grandchildren change? Will our families be more willing to spend extra money on private schools and private learning programs — given a cutback on other spending?

❚ Pets: Before we held off on pets because of the extra responsibility and didn’t want pets to hold back our travel. Now, maybe we do want pets? Now, maybe with more rural land and less condo, we want a wide range of pets. This could be a significant new expense.

❚ Supporting others: With a changing and possibly struggling economy, there may be a greater need to financially support other family members. Who might need the help, and how much should we set aside for this?

❚ Healthcare and longevity: Will we have greater health-care challenges if we have had and recover from COVID? Will it decrease our longevity?

❚ Taxes: If the economy is being held together by government spending, who is going to eventually pay for it all? Should I be planning to pay more in tax and receive less from the government in the future?

How much do I need?: This whole thing may have caused me to question how much I need the trappings of an expensive lifestyle? Maybe a simpler life is a safer life and happier life? Maybe I don’t need nearly as much money for my future as I thought?

In 2009, our company saw a big increase in financial planning as people emerged from a financial crisis and worried about their financial future.

Right at the moment, most people are a little less worried about their financial future because they are busy rethinking their entire future and how it might change.

As you do your personal COVIDflecting, may it be meaningful for you.

Ted Rechtshaffen, MBA, CFP, CIM, is president and wealth adviser at TriDelta Financial, a boutique wealth management firm focusing on investment counselling and estate planning. You can watch their recent webinars on investing, COVID and tax at www.tridelta.ca/webinars