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Tag: Washington

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Think 61 is Your Golden Retirement Number? Think Again

Elderly couple enjoying retirement

“There's nothing wrong with looking forward to retirement and even planning an early exit from the workforce.  However, Americans may be a bit misguided, when it comes to this particular milestone.”

If you work for a living, chances are good you like to daydream about what your life will be like during retirement. We all do it and so do younger workers who have yet to pay their dues.  However, according to a survey from Bankrate, as reported in The Motley Fool’s article titled “Americans’ Ideal Retirement Age–and Why It’s Not Realistic,” adults across the board think that 61 is the ideal age to retire.  Is that realistic?

Unless you can live without Social Security during retirement, 61 is not your magic number. Most American retirees can’t live on Social Security alone and those benefits have a major impact on the ability of most retirees to keep up with their bills.  However, eligibility doesn’t start until age 62. The people in the survey either didn’t know they can’t collect Social Security until they turn 62 or they are assuming they can get by without it.

The average Social Security benefit check is just more than $1,400, which adds up to about $17,000 a year. If you are among those who have little or no money set aside for retirement, that’s a lifeline.

A large number of working Americans are way behind in their retirement savings. It’s estimated that around 42% have fewer than $10,000 set aside for the future. How will they retire at all, much less retire at age 61?

Even if you can manage to keep working until age 62, filing at that age has its own issues. Today’s workers need to wait until their Full Retirement Age, or FRA, in Social Security’s terms, to receive their full monthly benefit. The difference is large enough to make it worth the wait.

Assume that your full retirement age is 67, but you retire at age 62. Instead of $1,400, your monthly benefit would be $980.

However, what if you are among those who really want to retire at 61? You’ll need to have started with saving and investing for retirement at a relatively young age and have been willing to take a very aggressive position in your investments. If you started at age 26, with a goal of retiring at age 61, and you are employed by a company with an employee sponsored 401(k), you’d have had to contribute $1,500 a month for thirty-five years to amass enough money—if your investments were earning a steady 7%.

If retirement is around the corner, one thing you can do is make sure your estate plan is in place. Therefore, whatever assets you have, will be distributed according to your wishes. Make sure you have also taken care of having a power of attorney and healthcare directive in place. Speak with an estate planning attorney to make sure these documents are prepared correctly.

Reference: The Motley Fool (July 18, 2018) “Americans’ Ideal Retirement Age–and Why It’s Not Realistic”

 

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Tell Someone about Your Advanced Medical Directives

MP900448483If you have a health care power of attorney and living will, you should make sure that someone you trust knows where to find them.

It is very easy to get advanced medical directives today. You can often get living wills and health care powers of attorney as part of the process of admission to a hospital. If you tell a doctor about your wishes, it is often good enough for the doctor to make a note of them in his or her notes. However, getting those documents at a hospital or by telling a doctor can be a problem.

The system of medical records used in the U.S. does not make it easy for doctors to know that you have expressed your wishes ahead of time, especially when they actually need the information as The New York Times reports in "You've Detailed Your Last Wishes, but Doctors May Not See Them."

There is a potential way to mitigate the possibility that this problem will happen to you. Get your living will and your health care power of attorney ahead of time, by going to an estate planning attorney. These documents are routinely created as part of the estate planning process.

Once you have created the documents, you should store them in a secure place.  However, do not stop there. Make sure that someone you trust knows where to find the documents. That person can then get them when needed, to the doctors providing care for you.

This is not a perfect plan that will work all of the time, but it is better than relying on the current system of medical records.

Reference: New York Times (March 27, 2018) "You've Detailed Your Last Wishes, but Doctors May Not See Them."

 

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Digital Asset Availability Limitations

MP900442500Gaining access to the digital accounts of deceased loved ones is slowly becoming easier. That means that people need to think about what type of access they want to grant as part of their estate planning.

Even just a few years ago, it was almost impossible to gain access to the digital accounts of the deceased. Even when ordered to allow access by judges, tech companies would point to their terms of service and deny that access. This created many problems for families and estate administrators who needed access to those accounts for a variety of reasons.  In Maryland, the legislature passed a law which became effective on October 1, 2016.  The law allows Maryland residents to name a fiduciary, during incapacity and upon death, to access the resident's online accounts. DC has not yet enacted such legislation.  For details on how to manage your digital assets, see an estate attorney.

In response to this problem, state legislators have slowly been passing new laws to gain access to digital accounts.  As a result, some tech companies are beginning to change their policies to account for this. However, when it comes to your estate planning, do you want someone to have access to your digital accounts after you pass away? If yes, for how long should they have that access?

This subject was recently considered by the Wills, Trusts & Estates Prof Blog in "Digital Assets Estate Planning — Alternatives to Perpetual Access."

The problem? The longer a digital account remains open without someone monitoring it, the more likely it is to be hacked by someone who can use the information in it for criminal, fraudulent or other nefarious purposes. Cases of this happening are becoming much more frequent. It sometimes means that estate administrators must deal with all of the problems associated with identity theft in addition to their more traditional duties.

Given these potential abuses, you might want to direct in your estate planning that your accounts be closed completely, after the period of time necessary to wrap up your affairs.

Reference: Wills, Trusts & Estates Prof Blog (April 6, 2018) "Digital Assets Estate Planning — Alternatives to Perpetual Access."

 

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Who Really Needs an Estate Plan?

children in a circle holding handsIf you were to survey people about who most needs an estate plan, the most popular answer would likely be incorrect. People think that the wealthy need estate plans the most.  However, that is not true. Parents with minor children need them more.   Planning for young families is critical to protect loved ones.

One of the fascinating things about estate planning is how it is perceived by average Americans. When you talk to people about it, they often think of estate plans as a way for rich people to determine who gets their property when they pass away. That is a big part of it but it is not the only reason for estate planning. In fact, the wealthy benefit from planning more than other people, only if you think that money is the most important thing people have to protect and preserve.

Most people think protecting their children is more important than money. That is why parents with minor children have more reasons to plan their estates than wealthy single people, as Volume One points out in “When There’s a Will.”

When parents of minor children plan their estates, they accomplish two very important tasks. First, they figure out how their children’s expenses will be met. Parents who thoughtfully prepare their estate plans can decide who will handle their assets for the benefit of their children and how that will be done. Even more importantly, they can decide who will take care of their children, should they be orphaned.

An estate plan is the only means by which parents have a say regarding who should be appointed as the guardian of their minor children, if anything happens to the parents.

If you have minor children, talk to an estate planning attorney, so you can make sure they are taken care of if the worst happens.

Reference: Volume One (March 7, 2018 ) “When There’s a Will.”