Life Packs

Ready to Retire

Made for anyone who is approaching retirement, needs help withdrawing from retirement savings, or is thinking about healthcare and life changes in retirement.

July 2, 2022


Retirement is the culmination of a long journey of preparation. Most everyone is excited to get to a point in their lives where they can stop working, slow down, or maybe pursue a passion project that earns a smaller amount of income. While entering your retirement years is exciting for some, it can also feel overwhelming. There are a lot of decisions that must be considered. As part of this Lifepack, we will look at topics such as helping you determine if you are financially prepared for retirement. How do you begin withdrawing from retirement accounts? As with saving for retirement, there are tax efficient ways to withdraw as well. For many retirees, one major source of retirement income is Social Security. When is the right time to begin collecting Social Security and how do you file for your benefit? We will also explore options for health care during your retirement years, including Medicare and long term care.

What about your living situation? Will you relocate to another location that has more enjoyable weather or more favorable tax rates? Will you downsize your home? Along with your home, have you addressed all your assets thoroughly in your estate plan?

There are many things to think about, but we have broken them down for you to make sure you enjoy your retirement years to their fullest.

Creating an Estate Plan

For many of us, we struggle to see estate planning as relevant. It’s human nature to focus on the here and now, while procrastinating things like planning for the end of life. However, the key advantages of creating an estate plan include minimizing the probate process and related expenses, delays and loss of privacy. If you wish to maximize what you can pass to your survivors, and minimize the amount that goes towards taxes, this is important to consider as soon as you have assets or dependents.

What is Estate Planning?

Estate planning is the process of designating who will handle your responsibilities during your life should you become incapacitated, and disposal of your assets after your death. One priority of estate planning is to ensure beneficiaries receive assets in a way that minimizes estate tax, gift tax, income tax and other taxes.

What Happens if I Don’t Have an Estate Plan?

A recent survey showed that 68% of Americans do not have estate planning documents. If you die “intestate”- without a will (it even sounds icky), your state intestacy laws will dictate who gets what. In general, assets are distributed to spouses and children. If you’re unmarried, or have a nontraditional family, this might not be the way you want your estate allocated. Basically if you don’t have a will, your state will create one for you. Rather than leave this up to them, create a plan so your wishes are known.

Catalog your Assets and Liabilities

First, you’ll want to prepare a complete list of your assets and liabilities. You may not think you have much of an “estate,” but once you start taking inventory you may be surprised at what you actually have. This list will help the estate attorney know the potential estate size, estate tax liability, and identify planning opportunities for you. The more you can be prepared in advance, the less time you’ll pay the attorney to go through this with you (these rates range from $250-600/hour) so make sure you do your homework!

What makes up your estimate?

You should also think about what you want your legacy to be. Will you provide for children, grandchildren, or give to charities? Thinking about this in advance can also help save billable time.

Choose an Attorney

Next you’ll want to start interviewing Estate Attorneys. Ask your network of advisors (your tax person or finance manager, for example) for referrals. Most attorneys will meet with you briefly to discuss your needs and you can determine if you think the attorney is a good fit for you or if you should keep looking. You can also consider online estate planning companies like Trust and Will. Complex estates with unique challenges such as a high net worth, limited liquidity, or blended families (just to name a few) may require a traditional estate attorney. However, if you have a simple estate plan you may be a good candidate for an online estate planning service. And you can save a lot of money this way (potentially thousands of dollars!). For example, if you have a young family and you’re just starting to accumulate wealth, you may be a good candidate for an online estate plan to make sure your family is covered. Either way, your estate attorney will review your specific situation and advise what type of estate documents you need.

Update your Beneficiary Designations and Asset Titling

As part of your engagement with your attorney, they’ll advise you how to title your assets and you’ll need to take steps to make these updates yourself. Too often people forget to take this step after they’ve gone through the hard part of preparing the estate plan. All that goes to waste (including the attorney fees) if you don’t implement their recommendations. You may also need to update your beneficiary designations for your retirement plans and life insurance policies to be consistent with your estate plan. Lastly, take this opportunity to make sure you have enough life insurance to cover your survivors.

It may be hard to prioritize preparing your estate plan, but the benefits to your survivors are immeasurable. Often survivors are left trying to figure out the decedent’s assets and liabilities, organize their household, and at the same time grieve for their loss. You can take steps now to help take care of your loved ones, and leave a legacy for generations.

Approaching Retirement

You’re in the home stretch. The time in your life that you’ve spent your career saving and planning for is almost here. Hard to believe, right? Well, all your hard work and dedication is something to be recognized, so congratulations are in order! Completing a career is an amazing accomplishment. But before you have one foot out the door, let’s take a look at some things that addressing now will serve you well in retirement (that was a party-pooper move, I know).

Downsizing your home

One thing retirees may consider is downsizing their homes. Fifty-one percent of adults over age 50 downsize to a smaller home in retirement. Aside from the obvious reason of not needing as much space, there are other advantages as well. Perhaps you want to move to a different climate. Maybe the stairs in your home are no longer your cup of tea. I myself would be happy with no more yard work. Oh yeah, and the potential added benefit of a lower cost! Lowering your housing costs will help you maximize your retirement income.

Top Reasons for Downsizing

Collecting Social Security

I don’t blame you if you’re thinking, “It’s time to pay the piper!” when it comes to Social Security. When you decide to collect social security benefits will dictate the amount you receive so it’s important to carefully consider your timeframe. Collecting when you’re younger will decrease your payments so if you can hold off for a few years, you’ll be better off.

Full Monthly Social Security Benefit by Age you Start Receiving Benefits

Retirement Savings Withdrawal Strategies

You were strategic about saving for retirement and you better believe you need to be strategic about withdrawing for retirement. Take into consideration all your sources of retirement income. Some are tax deferred, some are taxable and some are tax free. Make sure you know the tax implications of each account type when withdrawing funds.

Long-Term Care

Long-Term Care Payment by Pie Chart

Another thing to think about is long term care. Long term care is services for a person’s health or personal care needs during a short or long period of time. These services help people live as independently and safely as possible when they can no longer perform activities of daily living (dressing, bathing, eating) on their own. Most of the time, this is done at home by unpaid family members, but it can also be given in a care center, nursing home or adult day care.

You can never know if you will need long term care. An unexpected illness or injury can change your needs suddenly. We’ll just put this out there- long term care is expensive. The cost of care could be several thousand dollars a month. Long term care insurance could be $2,000-$3,000 a month. Research your options for paying for long term care. If your income is low, it could be paid for by Medicaid. Otherwise, you could opt for long term care insurance, funding it personally, veterans benefits, or possibly through benefits provided by the Older Americans Act.

About 70% of Americans over the age of 65 will need long-term care services during their lifetime

Medicare/Medigap/Medicaid, Nice to Meet You

So many medi’s to keep track of. And we won’t sugar coat this- they’re all complicated. Gather information about Medicare and Medigap now before you retire. Medicaid is only applicable if you have qualifying income so if that will apply to you, find out the requirements and benefits offered in your state.

Your well-deserved retirement is just around the corner. Utilize these tips to make the most of your time and money.

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