Life Changes 2008

Editor's Intro:  Financing Life Changes

Chances are you've passed a wedding taking place somewhere recently and it's triggered a bit of reflection, if not nostalgia, about your own nuptials. That, in turn, unleashed a flood of memories about the big moments of life -- college, parenthood, children, retirement -- and maybe even a twinge of mortality.

All of these major life events present changes and challenges -- emotional, logistical, psychological – and, of course, financial ones.  And sometimes it is the last of that bunch that finds us unprepared and leaves us overwhelmed.  Needless to say, we wouldn’t want that to happen; thus, this need-to-know guide, named, aptly enough, “Life Changes.”

There’s nothing quite as profound as changing the definition of your existence from singular to plural, as we replaces me. That’s marriage in a nutshell.

Regular contributor Jennifer Woods gets us started there. Planning a wedding may be one of the biggest budget exercises of your life, but it is also the technical beginning of a marriage -- think merger -- and the complex commingling of assets, liabiities and financial commitments.

“It’s important to make sure you and your partner openly discuss and agree on money matters before you tie the knot,” writes Woods, in offering up ten tips for nuptials. The list includes the unexpected advantages of prenups, the virtues of yours-mine-and-out accounts and the need to talk about parents and elder care.

Shelly K Schwartz, another of our personal finance regulars, picks up the trail with parenthood, chidren and all the trappings, taking us all the way through the big-ticket crescendo of college tuition. (Think of your child as a taxi meter that runs constantly for 17 years).

"Planning for parenthood is a busy -- if joyful -- affair," begins Schwartz. "Amid the whirlwind of baby showers and ultrasounds, however, moms- and dads-to-be often overlook ... getting your legal and financial house in order."

But you should look it over. The U.S. Department of Agriculture estimates it will cost middle-income families with a baby born last year (2007) $204,060 to raise a child through age 18 – in clothes, food, shelter, childcare, and other necessities.

(Click here for the full report (PDF) and all categories or compute your own tab with this calculator.)

College tuition for four years, of course, can make that look like small change. Schwartz also covers the ABCs of saving and paying for college, 529  plans, government loans and financial aid. Among her list of dos and don'ts, don't let the sticker shock get to you. You can afford Ivy League schools, thanks to new, generous financial aid formulas.

"It’s gotten to the point where graduating from Harvard will probably involve less debt than some public colleges," Mark Kantrowitz, publisher of, an online source of student financial aid information, tells Schwartz. 

Tens of thousands of dollars later, Woods is back to tell us what to do with the money that’s left. Her ten tips for retirement should help you plan and execute during those golden years  (Get out your calculator. Skip the watch.)

“Take an inventory of everything you have, and everything you expect to have going into retirement, so you know what you’re dealing with,” writes Woods, whose list of dos and don’ts includes the perils of overlooking provisions for long-term care and out-of-date documents.

But here’s the essential equation for which you’ll need to do your own personal math.  Conventional wisdom says people need about 80% of their current income for retirement.  And most people should withdraw no more than 4.0-4.5 percent of their savings – adjusted for inflation – each year of retirement. (Depending on your level of optimism, factor in social security payments.) editor and staffer Cindy Perman completes our cradle-to-the-grave guide with a look at preparing for the end, from estate planning to living wills.

"The truth is, everyone needs a will, because, well, you never know." notes Perman, who's reportorial charms include a blunt wit. "Stop making excuses and just do it.

To wit -- in this universe, the buck stops here, so to speak.