Mutual Funds

How Life Events Affect Investing

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Significant life changes can impact your savings and shift financial priorities. Here are some ways you might consider adjusting your investment strategy to accommodate life's different stages:

Marriage: You're a risk taker, but your spouse, not so much. Marriage is about compromise, and you'll need to find investments that work with both your personalities. Consider having a core base of assets invested with a balanced approach and a smaller pool in which you can take greater risk.

Having a baby: Parents want the best for their kids, and that likely means a college degree in hand. When your kids are born, begin investing in an education savings plan. Even small amounts will make a dent in the big tab for tuition, fees, housing and books.

Divorce: You may be forced to divide your savings and retirement accounts with an ex-spouse. With a smaller pool of money, you might consider a more aggressive investment strategy. Though it entails more risk, it also has a potential for higher returns.

Changing or losing a job: Without an income, you may need to put your retirement savings on hold briefly. When you begin working again, increase your contribution to savings and emphasize growth investing—investments with greater potential for high returns. Also consider rolling over the 401(k) from your previous job into an individual retirement account so you don't lose track of it.

Retirement: In retirement, you shift from saving to spending. To make your money last, you may consider dialing down your investment risk with fewer equities and more fixed-income. Make sure to pay close attention to your withdrawals and taxes.

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Prior to rolling over assets from an employer-sponsored retirement plan into an IRA, it's important that customers understand their options and do a full comparison on the differences in the guarantees and protections offered by each respective type of account as well as the differences in liquidity/loans, types of investments, fees, and any potential penalties.

Securities Issued by State Farm VP Management Corp. For more information, call 800-447-4930.

Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.

Neither State Farm nor its agents provide tax or legal advice.