News & Resources: Blog

Retirement: Embracing Life’s Changes

Published: December 15, 2022

Aging is not something we enjoy, but when you consider the alternative, it is a sign of a successful life. With age comes wisdom and many years of life experience. Once we embrace aging and accept all the value that comes with it, we can age with dignity and grace.

As we get older, we may reflect on our vast experiences. Some memories bring us great joy and pride, while others create feelings of resentment or regret. Each offers a unique perspective of a life well-lived. Coming to peace with the years that have passed helps us commit to living the remainder of our years to their fullest.

Planning for the Future

Thinking ahead and appropriately planning for retirement is the best way to ensure that our later years provide us with a comfortable lifestyle and a means to pass our legacy to the next generation. We want to live independently for as long as possible and reduce the financial burden of potential health care so it won’t impact other family members. Whether you have already begun planning or are just in the beginning stages, there are a few key considerations.

Lifestyle

Considering what type of lifestyle you desire to live is essential when planning your retirement. Think about your current spending and social habits.

  • Are you frugal with your spending? Or do you have liberal spending habits?
  • Do you enjoy spending time out with friends? Or prefer to stay in?
  • Do you travel often? Or like being home?

Be truthful with yourself in regard to your current lifestyle. Then, look at your future. Is this the lifestyle you want to continue to live? Or are you looking forward to a different approach in your senior years? Lifestyle is one of the most critical factors when financially planning for your future. An elder law attorney and financial advisor can help determine what that will look like.

Location

The desired location also plays a significant role when planning for retirement. When deciding on potential retirement locations, there is much to consider. First, look at the cost of living in your desired area to determine if it fits your retirement budget and preferred lifestyle.

  • Ensure that you choose a location with a climate that meets your aging and health needs.
  • Choose a location closer to friends or family if you want to spend quality time with your loved ones. As we age, we may become more reliant on our family.
  • Consider access to different senior resources. Different states provide a variety of communities and assistance programs for senior citizens. Certain locations have more active retirement communities or larger retirement populations than others.

Worst Case Planning

Adverse health problems and unforeseen life events happen. Many of us avoid thinking about these potential occurrences. However, the outcome can be much more positive if we plan for these undesirable events.

  • Long-term care insurance can help prepare for potential age-related health issues and expenses. But it is important to purchase it while you are still healthy and eligible.
  • Medicare does not generally cover long-term care expenses except in limited cases.
  • Medicaid planning is an alternative but requires a few years to develop a legal strategy to protect assets and qualify for benefits. An estate planning and elder law attorney can explain the details of your state’s look-back period and create a plan that is ready when you need it.

Financial Planning

In addition to Social Security, most save for retirement with 401(k) benefits provided by full-time employers. However, other options exist for those who want more financial security and those who do not have a 401(k) or an employer-sponsored retirement plan.

Passive income sources are gaining popularity in recent years. It allows you to make money without actively working. One popular form of passive income is real estate investment. If you have the means or plan on selling your current home to downsize, investing in a rental property can be a lucrative form of passive income.

You may also have a business that can be managed or sold but allows you to remain a consultant or continue earning income with little involvement. Business and estate planning attorneys can protect your investments from personal liability, transfer ownership to trusts, minimize taxes, and ensure they are preserved for family members if you become disabled and after you pass.

The Next Step

The process of aging does not have to be a scary one. Even if our life takes unexpected turns, proper planning and a positive outlook can make any circumstance manageable or fulfilling. Retirement requires careful thought, planning, and decision-making for the best outcome possible.

We hope you found this article helpful. 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.

- Estate Planning Mistakes to Avoid

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CLIENT Testimonial

Our family had the good fortune to find Scott Bloom.  He was invaluable helping us set up our trust. We had an unexpected health crises and realized that we had nothing in place to protect our children.  Scott explained our options and got the necessary paperwork ready for us to hand to our family, accountant and banks. Scott was absolutely the right attorney at the right time for us. We would highly recommend him and his team.
- Tricia B., Hamilton, New Jersey

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NEED Legal Help?

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Call Today: 215-364-1111
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