Wow! The miracle of life! My favorite part of the experience of becoming a father was that for two days in that hospital, nothing else mattered. Then as we drove out of the parking garage to head home, I was cut off by an angry driver who waved at me with a single finger; welcome back to reality!
Here are five things to consider when it’s back to business with a new baby.
- Life Insurance: When you have a helpless lump that is wholly reliant on you and your future income, life insurance moves from a “nice to have” to a must. Young parents should consider 30 year term life insurance on both parents, even if there is a clear primary breadwinner.
- Estate Plan: Most people think of a Will as serving the purpose of dividing wealth, which is true. But the pressing need today is appointing guardians for your minor child. Know that you can divide the responsibilities of raising the children and managing the finances you leave behind; one person doesn’t have to serve every role. You will also knock out key docs like living will, power of attorney, and healthcare power of attorney.
- Retirement Account Beneficiaries: Your Will does not govern retirement accounts, which move via beneficiary designation. Add your children as contingent beneficiaries on company retirement accounts like 401k’s, and your IRAs.
- College Savings: You and your family can start saving for college in a 529 account as soon as the baby has a SSN. Start with something to get the savings habit started and to take advantage of compound interest. As dollars stack up and the college ambitions take shape, we can decide later whether the 529 is the best account for all saving on the child’s behalf.
- Remind Grandparents to Review: Especially if they are first time grandparents, give mom and dad a reminder that they may want to review their own planning in these areas.
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