Preparing for retirement includes anticipating the level of one’s future income and the lifestyle it will allow. However, retirement planning should also include estate planning.
The good news: if you are preparing to retire, now is the perfect time to create (or revisit) your estate plan. Why?
1. Beneficiary Designations – Two birds, one stone.
Both retirement planning and estate planning involve your reviewing and potentially updating your beneficiaries on life insurance, retirement plans, and any pay-on-death designations. By preparing your estate plan and your retirement plans concurrently, you need only make important decisions around beneficiary designations once and apply those decisions to both plans.
2. Powers of Attorney – Identify your go-to people.
As you near retirement, you should have powers of attorney in place, in case you need to rely on a friend or family member to handle your financial affairs or make medical decisions on your behalf. Often, people avoid considering what would happen if they cannot handle their own affairs or make their own medical decisions. However, it is far better to address the issue now and make certain that the people acting on your behalf are those you know and trust.
3. Complementary processes ensure the right plan is in place.
Considering your estate plan while you plan for retirement can help you determine whom you should name as beneficiaries and how to ensure that they inherit without complication. If you prepare your retirement plan without taking into account your estate plan, however, your wishes might not be fulfilled. For instance, if you want a retirement account to go directly to your grandchildren and they are minors, naming them as direct beneficiaries could pose a huge headache for your family as minors cannot inherit directly. An estate planning attorney can help you determine who or what to name as beneficiaries of your assets so that your wishes are ultimately met.
Most of us do not feel a sense of urgency to get our estate plans in place. After all, few people think that they are going to pass tomorrow. However, preparing for your retirement is also the perfect time to create or revisit your estate plan. Without a viable estate plan, your retirement plan isn’t really complete.