Planning for Retirement Income and Your Estate

Relatively speaking, the world is getting better and more secure. However, across North America, Europe, and other regions with traditionally strong economies and social structures, it can seem as though we are not headed for better times. For folks moving close to retirement age and those already past it, planning for the future has taken on even greater significance than before. How will I manage to live comfortably? Will my loved ones be safe after I’m gone? Certainty over the answers to these questions is diminishing for millions of people every year.

Securing quality retirement and effective estate planning in this mediocre economy and cynical political climate is far from a fool’s errand. It simply requires new tactics and strategies. The world changes and our methods for success must change too. The traditional retirement plans of previous generations are being increasingly made unfeasible by inflation and legislation. Unconventional, albeit responsible, steps must be taken along with ones which remain tried and true:

Supplementing retirement income

Simply put, a dollar doesn’t go as far these days as it did in decades past. Earnings haven’t matched inflation, which means salaries are lower, meaning Social Security payouts are less than they ought to be – leaving individuals to often figure out their own retirement plans. Many have, but thanks to recent economic dips and twists, their projected post-career retirement income streams have taken a dive. This leaves a financial void to fill.

Some soon-to-be retirees plan to sell their homes to supplement reduced retirement income, choosing to rent a condo in a less expensive part of town and save the cashed-in equity. Another option that enables retirees to remain homeowners is a home equity conversion mortgage. By using a calculator for a reverse mortgage, folks can get an idea on the amount of cash or level of credit possible with their current situation. This form of borrowing calls for no repayment so long as the borrower remains living in the home, thus freeing up cash flow.

Managing retirement income

After filling the gaps it’s time to make sure you manage retirement income responsibly. This is particularly important if a lump sum of money is being utilized for what is projected to be decades of retirement living. Financial wriggle room is key – and relative depending on the standard of living. Four years of unexpected expenses in excess of $10,000 or more within a 10-year period can mean faster-than-expected dwindling of cash on-hand. Furthermore it’s crucial to get a handle on retirement taxes and avoid scams targeted towards retirees.

Maneuvers to access home equity through previously mentioned reverse mortgages or other methods of improving cash flow during retirement are not decisions to be taken lightly. They are also not methods recommended for investing. With that said, immediate access to supplemental income in the form of a loan or credit line can allow for an existing investment portfolio to be more confidently adjusted.

Estate planning

More than half of Americans approaching or past retirement age lack any kind of estate planning. Most discussion cites the morbid subject matter as the reason we tend to avoid coming to official terms with our eventual earthly departure. However it’s believed the financial element of estate planning plays a major role in the avoidance rate. Drafting wills, powers of attorney documents, and property forms necessary to secure an estate after death can cost anywhere between $1,000 to $5,000.

Thoughts of our mortality and spending a stack or more for abstract legal preparation don’t mix very well in the pond of the mind. However estate planning is critical for ensuring loved ones are not left with a legal and financial mess after you’re gone. If access to cash becomes available through selling a home or opting for an HECM or non-HECM loan then it’s perfectly responsible to withdraw funds for estate planning. Just make sure to shop around for a reputable estate attorney.

Many Americans and folks in other parts of the developed world are coping with hard realities about retirement. The once-sufficient pension, Social Security payment, and 401(k) are often not enough to make ends meet on the projected timetable. This puts pressure on them to put off estate planning. However, a compromise can be reached to help everyone: take steps to fill the gaps in retirement savings and income, then use some spare cash to get your estate in order. The future looks a lot brighter almost immediately.


Categories: Real Estate

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February 10, 2016 Planning for Retirement Income and Your Estate