Retirement: Planning for What if’s by Karla McAlister

Recently, I have had the privilege of helping several clients with Retirement on their minds. Retireme nt seems to be a trigger for folks to think about their planning. Actually, it is projected that one in five Americans will be over age 65 during the next twenty five years so there are many people either thinking about retirement or actually beginning retirement. When young couples have a child they initially think about planning to make provision for a guardian of the child and a method to care for them if they are not living. At retirement most people focus on how to plan for their children to help take care of them if there is a crisis.

Financial advisors can assist you with a multitude of spreadsheets and calculators to help you determine how much money you need to retire or when you can afford to retire. There are books, articles and websites devoted to planning for the financial side of retirement. When we visit with clients we may be asked to assist with the tax side of the financial equation. If your net worth is less than three million dollars you may not require a lot of tax planning but you still need “life planning”. In this article I am focusing on the life planning not tax planning side of our practice.

As advisors, our role is to help you plan for the what if’s of life. What happens if there is an illness, disability, incapacity, death of one spouse or of a child that changes how your estate planning will function and carry out your desires in this final 30 years of your life. The plans you make at age 55 as you anticipate retirement may be very different than what you need at age 70 when your children have moved to another state and your spouse has been diagnosed with a terminal illness. Our goal is to make the plans flexible for changing circumstances and to be aware of the options available. Many of the what if’s may never happen. You may name an agent to help you if you become incapacitated and that never happens, but if it does happen and you have not planned you may have a court deciding who should be your guardian.

A few questions you should ask yourself as you consider your planning and your retirement future are:

1. Who will take care of my finances and make decisions about my care if I am not able to make those decisions? This should be someone you trust who has integrity and the time to help if you need assistance. If you are incapacitated and do not have a Durable Power of Attorney, Healthcare Power of Attorney and/or a Revocable Trust your family will probably have to file a Petition for Guardianship and have the court appoint a guardian to manage your affairs, both personal and financial. You are then depending on the Court to determine who should make decisions on your behalf and you have the expense and inconvenience of Guardianship proceedings.

2. Do I have alternates named on all fiduciary posts, trustees, agents, proxies, personal representatives? It is best to have at least two and three is even better. Most couples name the spouse first but if the spouse is disabled or dies then they may have no alternates or only one alternate who was named twenty years ago and is unable to serve. It is best to have some younger people named to these positions as you age. You want the agent to be available and able to help if you begin to experience impairments such as dementia.

3. Does my Will or Trust reflect my current desires regarding the disposition of my estate? Review your planning regularly and update it. Surveys indicate that 64% of Wills have some inaccurate information that the Testator did not correct before death. This might be from a death, divorce, incapacity, relationship issues or even listing of assets no longer owned by the Testator. I regularly have clients who mention that the person named as Personal Representative is no longer living or has health issues and they should change their nominations. Unless you regularly look at your planning, and we suggest getting it out and reviewing it at least once a year, it is easy to overlook changes that should be made in the plan.

4. What will happen if I or my spouse has to go into a nursing home? Think about and plan for the possibility of needing a nursing home or home healthcare sometime during your lifetime. The New England Journal of Medicine estimates that 43% of the baby boomers will either spend some time in a nursing home or need home health to come to their home during their lifetimes. When a person reaches age 85 the percentage goes up to a 60% chance of needing such assistance. Planning for long-term care by purchasing insurance may be a smart move. Be sure if you purchase long term insurance that it allows for you to choose either nursing home care, adult day care, assisted living facility or at home assistance.

5. What is my retirement lifestyle going to be? I have many clients who are retired and it seems that a key to a successful retirement is to enjoy life. It is important to work at staying healthy so you can enjoy activities and remain independent. Each person is different in what they enjoy- it may be travel, grandchildren, gardening, writing, or even a second career. Part of planning is visualizing and planning your retirement years.

As you make plans for the “golden years”, we would be honored to assist you in your planning. For your retirement to be “golden” it is important to think about the “what if’s” and make contingent plans.