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How to Save Money While Aging Well

Published: May 18, 2023

Since Americans are now living longer than previous generations, our retirement years may be extended as well. Since expenses, taxes, and inflation don’t go away simply because we retire, we need to make sure we have enough money to live comfortably while meeting increasing costs of living.

The first step in the process of planning for retirement is to consult with a financial planner or estate planning attorney. They can help you create a financial plan for living a comfortable life after you receive your last paycheck. In addition to having a solid financial plan, here are some things you can do to increase the funds you have available later in life.

Continue Working

Delaying retirement may not be the most popular option, but it’s a practical one. If you continue working past the usual retirement age, you’ll be able to continue living longer with the same level of comfort and lifestyle. Also, waiting longer to receive Social Security payments after your initial retirement age increases your payments.

If you have retired but have discovered that you need, or at least would like, a steady paycheck again, you can return to the workforce. Even if you can’t return to the job you were doing before you retired, there are many other opportunities. There are part-time and full-time prospects in the retail and hospitality industries. Temp services can find short-term and long-term assignments in offices and remotely.

Some retirees return to the workforce even though they don’t need the money. They enjoy the social aspect of working with others and the sense of purpose that work offers.

Downsize

Think about what you own and find things you can do without. Do you have an extra vehicle you don’t need? Do you have recreational vehicles you seldom use? Could you sell the house you are living in and move into a smaller place? Are you living alone with more than one bedroom? If so, you could rent out additional rooms to generate some income.

Adjust Your Spending Habits

Review your expenses for the past few months to find unnecessary purchases. If you are eating out often, start cooking at home regularly. If you have memberships or subscriptions you’re not using, cancel them. Track your expenses going forward and find things to eliminate.

Move to a Less Expensive Place

If you are living in an expensive area, moving to a place with a lower cost of living could save you tens of thousands of dollars per year. Research a list of cities, states, or even countries that are described as great retirement locations. You could save money and experience life in a different culture.

Stay Healthy

One of the best ways to save money is not to spend it on health-related issues. Staying healthy will help you stay out of hospitals and doctors’ offices. Eating modest portions of healthy food, exercising, and socializing regularly will help you stay fit. Finding ways to reduce stress will go a long way. Kicking bad habits, such as smoking and drinking, can help you avoid many serious health problems. Talk with your doctor about ways to adopt a healthier lifestyle.

Reduce Debt

Debt, especially credit card debt, can take a serious bite out of your monthly budget. Ideally, you should be debt free before you retire, but if you aren’t, make a list of your debts and the interest rates associated with those debts. Pay off the debts with the highest interest rates first.

Putting It All Together

Talk with a financial advisor about how you can save for retirement and manage your money effectively. Ask your doctor how you can adopt a healthy lifestyle. Consult with an estate planning attorney or elder law attorney about ways to pay for future health care costs and about how to leave a legacy. By combining different strategies, you can have enough money to live comfortably in retirement.

Our estate planning law firm is dedicated to keeping you informed of issues that affect seniors who may be experiencing declining health. We help you and your loved ones prepare for potential long-term medical expenses and the need to transition to in-home care, assisted living care, or nursing home care.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

CLIENT Testimonial

It is important to plan your estate to ensure that your assets, interests, and those you love will be protected after your death. However, without proper guidance and advice from a qualified estate planning attorney, many individuals make costly mistakes. Beyond undermining your intent and diminishing your financial legacy, poor planning can create additional stress to your heirs in their time of grief.

Six common errors frequently happen during the estate planning process. These mistakes often occur because the complete financial picture was not fully considered. It is easiest to avoid estate planning mishaps by knowing what they are before you begin or looking for these errors when reviewing and updating your plan.

Financial procrastination causes problems. While examining your mortality and making end-of-life preparations is not a particularly fun activity, try viewing it as helping and enhancing your loved ones' future lives while creating a sense of peace during your own.

The need to protect your finances using wills, trusts, and power of attorney (POA) documents is not solely the domain of the elderly. Putting off the drafting of legal documents necessary to protect yourself and your inheritors can lead to disastrous outcomes.

By far, failing to create an estate plan is the most common mistake. Even if you do not have a lot of money, you need a will to protect any minor children you have by naming their guardians. Your will also ensures your asset distribution to heirs is carried out according to your intentions when you die and names a representative to handle debt obligations, final taxes, and other estate administrative duties. Dying without a will or "intestate" can lead to dire consequences.

Outdated wills, forms, and POAs create problems. If you made a will twenty years ago and have not reviewed and updated its contents, chances are many of the details no longer reflect current assets or beneficiaries. Estate planning is not a "set it and forget it" proposition. Reviewing estate planning documents and beneficiary forms every two years is generally adequate, barring a major life change such as divorce, birth, death, remarriage, or relocation to another state.

Beneficiaries without coordination can create expensive oversight. Beneficiary forms for retirement accounts like 401(k)s and IRAs, annuities, and life insurance policies may constitute a significant portion of your estate's assets. These beneficiary forms are legally binding and will supersede the contents of your will. Failure to update beneficiary forms can lead to an ex-spouse receiving assets that preferably would go to your heirs. Routine checks of all beneficiary designations are best practices for estate planning.

Failing to title trust assets properly can lead to probate. While not everyone requires a trust, those who do must carefully retitle their assets into the name of the trust. Forgetting to add more recently purchased property or opening a new account requires you to title them into the trust to receive trust benefits. Whether real estate, cash, mutual funds, or stocks, if you fail to move the asset into the trust, they become subject to the probate court, possible tax consequences (depending on the trust type), and a public record of these assets.

Life insurance can trigger estate tax. Life insurance can provide heirs with liquidity without the sale of assets and tax consequences when handled correctly. However, if a wealthy individual dies while maintaining ownership of their life insurance policy, they may inadvertently create a tax event for their heirs. Although life insurance death benefits are not subject to state or federal income taxes, any "incident" of ownership by the decedent can create an inheritance tax.

An estate planning attorney can help shelter life insurance proceeds from high-value estates by gifting the policy to an Irrevocable Life Insurance Trust (ILIT) or draft a new trust to purchase a new policy where the trust is the owner and beneficiary. A policy owned by the trust does not create a taxable situation to death benefits. Your attorney's careful structuring of this trust type is complex but can provide proper protection.

Joint ownership of assets with your children can lead to disastrous consequences. Naming your children as co-owners of assets, even digital, permits their creditors to access your money. The better way to address the situation is to give your adult child power of attorney and assign them as a beneficiary to a payable on death bank or brokerage account. This tactic permits them to access your funds if required during your lifetime. However, it keeps your assets from your child's estate and away from their potential creditors.

Ultimately the biggest error you can make is not finding the right estate planning attorney to guide you. This specialized attorney receives training on avoiding probate, tax implications, and asset protection if you require long-term care. Proper planning with the right guidance will help you avoid costly estate planning mistakes and protect your family's future financial well-being.

If you have questions or would like to discuss your legal matters, please do not hesitate to contact our office at 215-364-1111 to schedule a consultation.

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CLIENT Testimonial

Sometimes after a loved one passes away, the family learns of things they were unaware of while the loved one was living. This was the case for one of our clients, Sam, after his father Tom Jr. passed away. Sam was always under the impression that the home he had grown up in, and that his father had lived in until his death, was owned by Tom Jr. To say it came as a surprise that it was indeed Sam’s grandfather, Tom Sr., who was the actual owner of the home, is an understatement.

Apparently, when Tom Sr. had passed away nearly 40 years ago, there was no proper estate plan established. Now, Sam would need to open his grandfather’s estate, resolve tax issues that were never addressed, and then go through the legal process to make the home a part of his father’s estate. At first, Sam believed that the entire process would be easy enough for him to handle on his own. However, after digging a little deeper, he quickly realized he would need the help of a knowledgeable and experienced attorney.

Sam reached out to Scott Bloom Law and we developed a game plan for moving forward. We began by probating Tom Jr.’s will and, after some time, we were able to settle the estates of both Tom Sr. and Tom Jr. While it was no fault of Sam, this is a great example of the importance of having an Estate Plan in place. No one wants to leave their families in precarious situations after they pass. The long-term purpose of setting up an Estate Plan today is to preserve as much of your wealth as possible for the intended beneficiaries and retaining a capable attorney can help ensure all of your wishes are met.

At Scott Bloom Law, we are a team of advocates who care, always fighting for what’s best for our clients and their families. With knowledge, experience, and compassion, we strive to find solutions that make the aging process as emotionally and financially easy as possible. Visit us at scottbloomlaw.com or call 215-364-1111, to talk to find out more.

- Case Study: Estate Administration

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Call Today: 215-364-1111
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