Ready or Not: Retiring with Confidence

Do I have enough money saved for retirement?

That’s the million-dollar question. The truth is, there’s no universal answer, but there’s a really important framework to follow.

The first step is to obtain a financial cash flow projection. There are retirement tools online that can be helpful.  I suggest obtaining a financial cash flow forecast from a financial advisor. This forecast will consider what assets you own, how they are invested, your current living expenses, your lifestyle and projected living expenses.

With this forecast, you can determine if you have to make any changes in the way your live and spend, whether you have a need for greater income which may be accomplished by changing your investments or whether you are in a good place to continue to live the way you desire with the funds that you have.

Generally speaking, financial planners and elder law attorneys advise retirees to draw from non-retirement accounts first—your regular savings, investment accounts, and the like. Why? Because your retirement accounts, like your IRAs or 401(k)s, continue to grow tax-deferred the longer you leave them untouched.

But here’s where it gets nuanced: if you’re in a lower tax bracket early in retirement, it might actually make sense to draw some funds from your retirement accounts to avoid a larger tax burden later. And don’t forget Required Minimum Distributions—once you hit a certain age, the IRS requires you to start withdrawing from those accounts, whether you’re ready or not.

A solid plan with a financial planner and an elder law attorney working together can make a significant difference in how far your money goes.

How do I get my “house” in order?

Estate planning is one of the greatest gifts you can give your family. And yet, it is what most people put off the longest.

At a minimum, everyone heading into retirement should have four key documents in place: a Last Will and Testament and Advance Directives: a Durable Power of Attorney, a Health Care Proxy, and a Living Will.

Another option is to have a Revocable Living Trust and Pour Over Will and Advance Directives. These documents ensure that if something happens to you—whether it’s an illness, an accident, or death—your wishes are clearly known and legally protected.

How should I organize records?

Organizing records are very important. Your loved ones should know where to find your financial accounts, insurance policies, property deeds, and legal documents. I always recommend creating a personal document organizer – something your family can access in an emergency. Something as simple as a well-organized binder or a secure digital folder can save your family an enormous amount of stress during an already difficult time.

I know it takes time and effort, but I also believe in the “What if letter?”.  This letter would outline all of the relevant information that you would want to pass on to loved ones if you got sick or passed away.  We work with clients in our law firm who are seeking peace of mind.

What should I consider when selling a home and/or relocating?

Moving is one of the biggest decisions a retiree can make—emotionally and financially. From a legal standpoint, there are a few critical things to think through before you sign any contracts.

First, understand the tax implications. If you’ve lived in your home for at least two of the last five years, you may be able to exclude up to $250,000 of capital gains from taxes—or $500,000 if you’re married. That’s significant, and it’s worth consulting with an attorney or accountant before you sell.

Second, if you’re considering relocating to another state, understand how that state treats retirement income, estate taxes, and Medicaid eligibility. Establishing domicile in your new place of residence is critical.

Those rules vary significantly from state to state, and they can have a real impact on your long-term financial picture.

Give yourself permission to take your time. Talk to your family. Talk to your advisors. Don’t let urgency drive a decision this significant. Get the right counsel, weigh your options carefully, and move forward with confidence. Test the waters by renting and not buying in the new community.

If you would like to speak with an experienced elder law attorney regarding your situation or have questions about something you have read, please do not hesitate to contact our office at 1 (800) 680-1717. We look forward to the opportunity to work with you.

Disclaimer: The information provided above is for general informational purposes only and is not legal advice.