I use their wonderful news to remind all parents (and grandparents, aunts, uncles, etc.) of the financial to-do’s after a new arrival … as if new parents did not have enough to worry about! Thankfully, none of this is urgent. But it needs attention within the first year.
Update your financial plan: If you have a financial plan, update it. If you don’t, get one. Your financial life has changed just as much as your “real” life. Goals, budgets — it’s all new.
Update your insurance: Health, life and disability are the three obvious types of coverage that may require adjustment. I’ll use life as an example. The best way for salary-earners to estimate their life insurance need is to calculate how much they will earn before retirement and buy the “present value” of that amount, after tax, in life insurance. The sum climbs with an additional family member.
Update your estate plan: Update beneficiaries of retirement plans, and make key changes to your will and any trusts. Perhaps most critical, however unlikely the need, is naming a guardian for children in your wills.
Open a 529 college savings plan and start contributing: I know. College is 18 years away. But the tax benefits of a 529 are meaningful, and greatest if you have a long time for the investments to grow in the 529 account. Grandparents, here’s your opportunity (when you are not babysitting).
If you attack this to-do list in the first 6-12 months, you will be able to focus on what really matters.
Welcome Baby Stanifer!