Retirement and Estate Planning
From LoveToKnow Seniors
Approach your retirement and estate planning with a proactive attitude. Quite frankly, securing your financial future and distribution of assets will help you greatly enjoy this next chapter of your life.
Benefits of Planning Ahead
When you think about retirement and estate planning, consider the fable of the grasshopper and the ant. The ant, methodical and dutiful, planned and worked to have enough food for the winter. The grasshopper wanted to believe that food for the winter would take care of itself, somehow.
Was the grasshopper an optimist…or shortsighted?
No matter what your age, be it 25 or 55, start planning now. Allocating funds for retirement, especially if you don’t plan on working past a certain age requires help from financial experts. However, these same experts stress that no matter what your age, you can start now to create the golden years you desire.
Estate planning is particularly important if you have children or specific directives regarding the distribution of assets. The size of your estate dictates whether you can generate a will yourself or need to hire an executor to oversee the process and result.
Does all this planning and saving mean you’ll only be the ant and never the grasshopper in your later years? Not exactly. Try to think of it this way: the ant had a very comfortable winter.
Will Boomers Go Bust?
Fables aside, there is some actual concern about whether Baby Boomers will be able to retire securely. News reports and statistical data indicates that Americans rely too heavily on Social Security and inheritance to fund their retirement years and it's a faulty premise at best.
Some studies indicate that Baby Boomers may not save as much or as well as the previous generation. Further, if they are saving, they are unprepared for an anticipated longer lifespan often requiring employment past the age of 65, not by choice.
Additionally, rising health care costs, considered by some to be a runaway train, are external factors that may derail even the most detailed retirement and estate planning.
Trendsetters from the day they were born, the decisions and actions of Baby Boomers will greatly influence subsequent generations.
Steps for Retirement and Estate Planning
Regardless of age, take action now. Educate yourself on matters concerning retirement funding and your estate. Here are a few age-related tips that can get you closer to your goals.
50s
Downsize extraneous spending: A bank commercial once asked a simple question: What do you want, gourmet ice cream, or a beach condo? The point was that nickel and dime spending adds up. For example, the $28 a week spent on lattes with whip is $1,456 a year that could be rolled into one of your investment accounts. Your mocha money can start to increase because of compounded interest, and in as little as 15 years, you’ll reap a tremendous benefit.
Contribute more to current investments: The IRS is kind to those aged 50 and over. In 2006, it authorized employee contributions up to $20,000 towards employer-sponsored retirement plans, and a maximum of $5,000 per year into IRAs.
Funeral arrangements: Death. Boo. There, we said it. It’s going to happen, but not planning ahead for it makes it worse for your family. Two schools of thought exist on this. Some financial experts suggest locking in arrangements ahead of time at today’s prices, while others recommend creating a fund designed specifically to cover funeral expense. Consult your tax advisor on what is the best for your needs.
Consider moving: If your kids have run off to college, or you just don’t need as much “stuff” as you thought, think about where you might want to retire and put the plan into gear. A smaller home in a cost-effective community leaves you with more money to invest.
Reevaluate your career plan: Historically, you’re at the height of your career now. And while the thought of retirement at 57 or 62 may be enticing, it may not be practical to your goals for retirement and estate planning. Consider the viability of staying on the job a few more years.
60s
Examine your portfolio: Take stock of your various retirement accounts. If you’re ending employment, the company’s 401K is ready to convert to an IRA or Roth IRA.
Consider a term life insurance policy: If you haven’t already secured this, here’s a great resource on how to make a qualitative decision on insurance.
Evaluate long-term care insurance: Prepare for the unknown and consider long-term care factors in advance. It’s wise to conduct this research while you’re still in good health.
Start dividing your estate: This is the time to modify your will, establish trusts, and, as painful as this may be, downsize material goods. Many seniors delight in watching the younger generation use Grandma’s china or joining the family at the lake cabin, but entrusting the care of it to someone else. Hold a family meeting to get input on the wishes of loved ones, make a list, and pass things along.
Educate yourself on Medicare: Ideally, this is done before you actually retire, so you can extend insurance from your employer as long as possible.
70s
Consider working longer: The IRS requires individuals to start taking distributions from IRAs at age 70.5 but there are some exceptions, and one of those is employment. Consult your financial advisor to see if you can save more of your nest egg.
Reduce medical costs: Options are available depending on your health. For example, look for discounts on medication, and create a medical emergency fund.
Diversify your portfolio: Now it’s time to establish a steady income stream from your investments. Consider rolling some funds into annuities or bonds for stability.
Conclusion
Retirement and estate planning may seem a bit overwhelming at first, but it can ensure a secure and comfortable lifestyle for years to come.
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This page has been accessed 1,426 times. This page was last modified 12:09, 3 March 2007.
© 2006-2009 LoveToKnow Corp.
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