Retirement Planning Tools

Meet with your financial adviser and estate planning attorney to ensure that your designations pass to the correct people.  This forethought can minimize expenses and taxes on your estate.   

​Retirement Planning Tools
By Pierre Mouchette | Real Property Experts LLC

Did you know that most people focus on having enough money to fund their ‘golden years’ but often overlook the importance of obtaining and organizing their documentation!  Meet with your financial adviser and estate planning attorney to ensure that your designations pass to the correct people.  This forethought can minimize expenses and taxes on your estate.
The following should be reviewed on a scheduled basis:

• Employers Pension Paperwork - if you have a pension from an employer, the plan's details can be found in the ‘Summary Plan Description.’  Additionally, you should have received an ‘Individual Benefit Statement’ that details the specific benefits you have earned and are eligible to receive.  Make sure to review these documents as you approach retirement so that both you and your spouse understand how much income you can expect from the plan and what will happen to that income if the primary pension holder dies.

 

• Beneficiary Designation Forms - Individual Retirement Accounts (IRAs), 401(k)s, annuities, and insurance policies allow you to name a beneficiary who will receive those assets when you die.  These designations take precedence over a Will, even if the Will is more accurate and up to date.  Because of this, it is essential to review the beneficiary designations on all accounts before retiring to verify that they accurately reflect your wishes.

 

• Social Security - you must provide certain documents when filing for retirement or survivor benefits.  These documents will include your Social Security card, a certified copy of your birth certificate, proof of citizenship if you were not born in the U.S., military discharge papers, a copy of your marriage license or divorce papers, and a copy of your W-2 form (or self-employment tax return).  Having these documents available will speed up filing.

 

• Insurance Policies – most people have life insurance policies that will help replace income in the event of a death, as a vehicle to build cash value, or for estate planning purposes.  Make sure to have current copies of your policies and contact information for the insurance company so you can contact them, or your heirs can claim benefits if something happens to you.

 

• Will/Trust - no matter the size of your estate, to control the passing of property at death, you need a Will.  Another tool to accomplish this while at the same time avoiding probate is called a Revocable Living Trust.  As you enter retirement, you should meet with your attorney to put a plan in place that passes your property to the correct people and designates the right people to take charge.

Note:  if you pass with a Will, the person designated to take charge are called ‘Executors.’  If there is no Will, an ‘Administrator’ will be appointed by the Probate Court.
 

• Durable Power of Attorney for Finance and Health Care - a Durable Power of Attorney is a simple and inexpensive legal document that authorizes an individual that you have chosen to step in and manage your day-to-day financial decisions if you become incapacitated.  Everyone needs this document to provide for the ongoing management of their financial affairs if they cannot make decisions. 
  Like a power of attorney for finance, the Health Care Power of Attorney is a legal document that authorizes a person you have chosen to step in and make health care decisions for you if you become incapacitated and can no longer speak for yourself.  You can also include a health care directive that provides written instructions that communicates your wishes regarding the withholding or withdrawal of specific life support equipment or medical procedures.

 

• Investment Paperwork - most people, allocate their assets into different types of accounts.  Some may be tax-deferred; others may not.  Some might have restrictions or requirements on withdrawals.  Some, like annuities, might give you different options for turning the account into a guaranteed income stream.  When transitioning into retirement, it is essential to have current copies of your account statements and options or restrictions associated with each account so you can craft a distribution strategy that meets your needs while minimizing expense, stress, and taxes. 

 
When you retire:

• Health Care Paperwork - health benefits during retirement can come from multiple sources.  These can include a former employer, Medicare, Medicaid, a Medicare supplement policy, or a long-term care policy.  Be sure to retain benefit summaries, contact information, and policies associated with each.  If you have not filed for Social Security benefits by age 65, you must apply for Medicare.

 

• Tax Returns - tracking and paying your taxes may become more complicated, especially since other states tax income and spending differently. 
  • Will you owe tax on Social Security? 
  • How about pension and annuity income? 
  • How much should you withhold from IRA distributions?

The short answer .......... “It depends.”

Note:  Because of this, you should work closely with a tax adviser and then maintain your tax returns and supporting documents for seven years.  The IRS could look back three years for basic errors and six if you underestimated income by more than 25- percent.
As indicated above ........ obtaining, understanding, and organizing your documents will not only help you to make informed decisions.  Still, it will also facilitate a smooth transition into a rewarding and meaningful retirement.