How much do you need for retirement? A survey by Fidelity found the average 65-year-old retiring in 2022 needed $315,000 after taxes saved — and that’s just to cover out-of-pocket healthcare expenses above and beyond health insurance premiums. Numbers like that can feel like enough to overwhelm any retiree, especially when you consider the other potential costs you’ll incur once you leave the workforce. They can keep the questions rolling in your mind. Are you saving enough to meet all of your needs? How will inflation impact your purchasing power? Will an economic downturn affect your nest egg?
Here’s something to consider: Many retirees have been in your shoes. There are ways to find answers to these questions and others. Planning for the future is never guaranteed, of course. But there are things you can do to keep your retirement strategy in check and ensure your assets are protected for yourself and your family. It all starts with planning how your estate — your possessions and your money — will be allocated upon your passing.
Set Clear Goals and Objectives
You can’t protect what you’re unsure of. So, it helps to start with a plan. What assets do you have? What do you hope to hand down to future generations as part of your estate? This can be an in-depth yet essential part of your estate-planning process. You can find books and self-help kits to assist you or work with your financial planner or attorney for more guidance.
This isn’t just about making sure your assets go where you want them to after you pass. Having clear goals also helps you tailor your estate plan to match your desires, such as to whom you’ll pass your wealth or the causes you wish to support.
Clear objectives help prevent confusion and disputes among your loved ones, too. Writing your thoughts means there’s less room for interpretation. That reduces the likelihood of family conflicts over your estate. It ensures your estate plan is personalized, protective, and aligned with your values and priorities. Plus, your plans can be adapted over time as circumstances change. So, it’s not just about the legal elements; it’s about ensuring your legacy reflects what truly matters to you.
Craft Your Will
Using a will as part of your estate planning is important for several reasons. First, it lets you have a say in how your assets are distributed after you pass away. Without a will, your assets may be divided according to state laws, which may not align with your wishes. With a will, you can decide exactly who should inherit your assets.
A will can also include provisions for asset protection, such as setting up trusts to manage and distribute assets over time. This can be particularly useful for beneficiaries who may not be financially responsible or those who have special needs. Wills are legally binding, which can help prevent family disputes and legal battles over your estate.
While a will doesn’t directly reduce estate taxes, it can incorporate strategies to minimize the tax impact on your estate by setting up trusts or making specific bequests. Plus, wills are flexible documents, meaning they can be revised as circumstances change. Having a will ensures that your assets are distributed according to your wishes, simplifies the probate process, and offers reassurance that you’ve taken steps to protect your loved ones and assets. Above all, it gives you peace of mind.
Create a Living Will or Advanced Healthcare Directive
Living wills or advanced healthcare directives help ensure your medical wishes are known and respected, especially if there comes a time that you can’t communicate them yourself. They let you determine exactly what kind of medical treatments you want or don’t want in situations like life support or artificial nutrition. This documentation takes certain difficult decisions out of the equation for your doctors and family.
This can reduce stress for your loved ones. Imagine a situation in which they need to make tough medical decisions on your behalf without knowing your wishes. It can lead to disagreements and emotional turmoil. With these documents in place, your family knows what you want, which can provide them with much-needed guidance during a difficult time.
Another important aspect is appointing a healthcare proxy or agent. This is someone you trust to make medical decisions for you if you can’t. It’s a way to ensure your voice is heard even when you can’t speak for yourself. Plus, it helps protect your medical privacy by specifying who can access your records and make healthcare decisions.
Knowing that your healthcare preferences are legally documented can be comforting. You’ve taken a proactive step to ensure you receive the medical care that aligns with your values and beliefs, even when you cannot advocate for yourself. So, it’s not just about legalities; it’s about your well-being and the well-being of your loved ones during emotionally challenging times.
Communicate Your Wishes
If you’ve ever been through the process of settling an estate for a loved one, you know what a difficult time it can be. Estate planning allows you to make it a little simpler for the people you care about. It’s about preventing confusion and misunderstandings among your family and loved ones. It’s about being very specific about what you want.
Whether it’s the way your assets should be distributed, your healthcare preferences, or end-of-life decisions, your loved ones will have a clearer understanding of your wishes, and that clarity can make a significant difference. Plus, discussing your wishes can provide emotional support to your loved ones. Knowing your preferences can make them feel more prepared to make tough decisions because you’ll already have made some of those decisions for them.
Life is full of changes, and so are your wishes. By keeping the lines of communication open, you can adjust your estate plan as your values and priorities evolve — and make one of the most difficult times a little less overwhelming for the people you love.