Your Retirement Timeline: A Guide to Essential Estate Planning

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If you’re nearing retirement age, there are probably a lot of questions swirling around in your head. How much money should I withdraw each month? When should I start collecting Social Security benefits? What’s the best way to save for retirement? While it’s impossible to answer all these questions definitively, this guide will provide an overview of essential estate planning for retirees. By understanding the various stages of retirement and what to expect, you can make more informed decisions about your finances and enjoy a comfortable post-work retirement!

Retirement Age Considerations

Beginning your retirement is a significant milestone that is worth celebrating. However, as you approach retirement, start considering the age you can retire before jumping into retirement life!

It makes sense to look at your health issues, possible sources of income, risk tolerance, financial security overall, medical expenses, life expectancy, taxable income, healthcare costs, potential social security income, investments, and more!

Approaching retirement, looking at your bank account, personal savings, investments, and any Roth or traditional IRA balances can help you see whether you can fund retirement and meet your future expenses.

Considering Social Security and Health Insurance

Individuals who plan to take Social Security Administration payments to fund their retirement must wait until they are 62 or older before they are eligible for payment. Waiting until age 70 can bring a higher monthly payment.

Depending on your needs during your retirement years, you’ll plan for what you need to live comfortably. Much of this decision comes down to personal preference. Many retirees can hold off retirement until they are full retirement age, while others must carefully consider whether they need to leave the workforce at age 65 or sooner.

“Financial advisors can use a person’s spending habits, expected inflation and life expectancy to determine how much they will reasonably need in retirement.” (1)

If the health insurance marketplace may cover your medical expenses, you may be able to retire younger. However, Medicare does not become available until a person reaches 65 years old – and this can be an additional roadblock if someone relies on their employer’s health insurance.

When you decide it’s time to retire, you have put in many years of hard work and are now able to focus your energy on the next phase of your life. However, before you begin this next chapter, you must ensure you have fully thought through this exciting change in your life. Consider what questions to ask about retirement income before starting the early years of your retirement.

Questions on Retirement If You Have an Existing Estate Plan

Certain estate planning issues you need to consider come with this new chapter in your life.

Retirement Savings and Your Existing Estate Plan

A properly executed and legally binding estate plan is an excellent first step toward ensuring that you and your loved ones are cared for. However, estate planning is not a one-and-done event. It is crucial to review your plan every year or so, especially after significant life events such as the beginning of your retirement.

When considering your existing plan, ask yourself the following key questions:

Do you still own the same property or account balances as when your estate plan was first created?

Chances are, you put money into investment or retirement accounts during your working years to prepare for this next chapter. While you may have a lot today, you need to know that this value may decrease once you start withdrawing from those accounts.

Does your plan assume that your children or other young beneficiaries are still minors?

A birth usually prompts parents to have an estate plan created. However, once it has been drafted, many parents continue living without giving much thought to their estate plan.

If it has been some time since your estate plan was created, your then-minor children are likely now adults or approaching adulthood. Your focus may no longer be on choosing suitable guardians but on ensuring that your adult children’s needs are adequately addressed in your documents.

Does your plan rely on proceeds from an employer-provided life insurance policy?

As part of an employment package, many employers offer life insurance. However, this policy may no longer exist once you stop working. You will need to explore other options if you had previously relied on these proceeds to provide for your loved ones at death.

Do you want to change how much your beneficiaries inherit or how they receive their inheritance? Now that some time has passed, will your estate give the amounts of money and property in the same way?

For example, imagine your will or trust provided that $300,000 be held in a trust for your only child’s benefit and then distributed to them when they turned thirty-five. Is it likely that you will have less than $300,000 at your death? Will your child need to sacrifice some of their wishes as a result?

Also, if your child is now thirty-five or older, any money and property would be given to them automatically based on the provisions in your documents. Are you still okay with that?

Now that your child is older and you better understand their needs and abilities, you may want to consider changing how they receive the money and property. Do you still think a lump sum inheritance is a good idea? Is there enough money there, considering cost of living increases over the years?

Your beneficiaries may require more income than you had initially planned. Let’s say your estate plan gives assets to a grown child who could responsibly spend their benefits.

However, your child now has disabilities that affect their ability to receive an inheritance without losing government benefits. How will you have peace of mind about their future if they live with limited government income? Perhaps it’s time to talk with your attorney about setting up a special needs trust to give monthly amounts that do not bring a reduced benefit to their future.

Perhaps your grown children are successful enough that they would be fine without an inheritance from you. In that case, you may consider retiring early and enjoying your golden years, knowing your grown children no longer need your financial resources.

Retirement Planning If You Do Not Have an Estate Plan

The only way to truly protect yourself and your loved ones is by having an intentional and legally enforceable estate plan. To begin thinking about your estate plan, you need to evaluate your new lifestyle and answer questions such as the following:

What accounts and property do you own?

To make sure that we craft a comprehensive plan, we all need to be on the same page about what you own and the value of your money and property. From there, we can help you determine what will happen to this money and property if you cannot care for yourself and what will happen later at your death.

What are the current needs of your loved ones?

Based on your unique situation, you should determine the needs of your loved ones and whether you can support their needs during your lifetime (if necessary) and at your death.

Can you accomplish your financial goals with what you have?

Working with an experienced professional, you can consider the answers to the first two questions and determine how likely you will be able to carry out all of your wishes. Together, we can examine all options and develop the best possible solution for you and your loved ones.

We Can Help

We are excited to help you celebrate this new chapter in your life. Part of this celebration should include a visit with your financial advisors and your estate planning attorney to ensure that the celebration can continue for many years.

If you are interested in discussing your existing estate plan or creating your first one, contact us at Vail Gardner Law. Our experienced team of attorneys can help you with any questions or concerns regarding your estate planning needs. We look forward to working with you!