Think ahead and be ready for good times and bad.
Living the kind of retirement you’ve dreamed of doesn’t just happen. It’s takes lots of planning, and that means figuring out exactly what you want to do first. After that, it means asking a lot of questions to make sure you’ve prepared yourself properly.
Some experts in estate planning and retirement answer some frequently asked questions.
Who will make health care decisions for you if you become incapacitated?
Greta Roemer Lewis, a partner in the South Bend law firm of Tuesley Hall Konopa, has practiced law for 20 years. She specializes in estate planning and estate administration.
“It’s very important to plan for what happens in case of incapacity. Who makes the decisions if you can’t? Who makes healthcare decisions for you?
“You also need to look at what happens to your estate after death. Is there a will in place? A trust? What are the distribution provisions? Are your IRA beneficiaries consistent with the provisions of your estate?
“I find planning for these kinds of things is very individualized. Some people just can’t deal with it. Some don’t want to talk about it but get forced into it because of emergency circumstances. There are a variety of reactions to that question when I ask it.
“I’ve found a lot of people work because they have to, and I see a lot of people who do amazing things. They volunteer in the community and stay active. That’s the thing I hear the most. The myth is you retire and go away.
“You need to be thoughtful of what you want to do. Planning sets a foundation. I typically spend a lot of my time counseling. I tell everyone it’s important to keep things updated and keep them current.”
What are the most important financial decisions you need to make for retirement?
Dale Parkison is a certified public accountant and a partner with the accounting firm Parkison & Hinton in LaPorte.
“The question I hear most is how much money do I need to retire? It’s very difficult to answer. Are you the type of person who needs a new car every year? Do you want to travel? Do you want to stay in LaPorte? The answer to those questions will have a lot to say about how much you need.
“A minimum amount is what people are looking for. Most people receive their retirement pay at age 66, starting with Social Security. What else have you saved? Do you have a pension? A 401(k)? What else do you have to draw upon or sell?
“I’ve found that very few are shooting for a number like $1 million. Ideally, you need to start planning at age 20, but the final answer is an equation that has so many variables.
“I don’t do what is normal retirement planning. I sit and talk. I don’t say you need X amount of dollars. For instance, if you hung your hat on CDs, you’re in bad shape right now.
“I find a lot of people continue to work after Social Security starts; some people never stop working. When Social Security was set up, the average male lived to be 66. Now, the average male lives to 79. You’ve got a lot of time to sit around and watch ‘Oprah’ if you want to.
“For a lot of people, it’s a different phase of life. If they want to help a kid, or become a custodian at their church, or like one guy I know, give flying lessons, there’s time to do that now. Ten years ago I would have said all of them would want to retire early, but since 9/11 and the economic downturn, things have changed. People want choices and they don’t want to be forced into retirement. They want to do the things they want to do.”
What’s the one single piece of advice you would give to someone who is about to retire?
George Carberry is managing partner in the Valparaiso law firm of Burke Costanza & Carberry LLP. His specialty is business law with an emphasis on health care law.
“Typically I would not talk about somebody’s assets. If you’re going to invest with three, four or five years left before retirement, I wouldn’t get into how much cash you’ll need.
“For me, the most important thing is ensuring your paperwork is in order. I want to assure that your pre-mortem and post-mortem planning documents are up to date. Have you designated a power of attorney and a health care power of attorney? Do you have a living will? Is there a funeral planning declaration? That’s a document that designates someone to handle your funeral arrangements for you.
“Make sure those documents are in good order and enforceable in another state if you’re moving to Florida, Arizona or Colorado. Usually they are, but it’s a good idea to make sure. Also make sure your will and trust, if you have one, are up to date, and accurately specify how your assets are to be disposed. Make sure the beneficiary designations you made in years past are still current.
“Take a look at your IRA, 401(k) accounts, life insurance or annuity policies. You designate beneficiaries while you’re working, but as life goes on you get distracted. Sometimes your life changes and maybe you’re no longer married. That’s really where the germ of my advice would be.
“One of the questions I get asked so much is, ‘If I do these documents, are they going to be valid in another state?’ It’s a good idea to make sure what the local custom in that other state is, so when you present those documents in another state, they are prepared properly.
“The vast majority of my estate planning clients are not planning any retirement in their mid-60s. They take it as a given they will be working later. Some of them have been kicked to the curb because of a reduction in force, but people generally think they will be working longer. I think they realize that playing golf or tennis 12 hours a day isn’t feasible.
“Some clients are concerned the government is going to get some of their assets upon their death. I tell them the federal and state tax isn’t as much of a factor now for people with less than $5 million in assets.
“I do have clients with some charitable intentions. We talk about the best way to make those things happen. Do you want to do it in your lifetime or when you’re gone, or both? Part of my job is to develop their thinking. A lot of times people are unsure and haven’t thought about things like what if a child predeceases you but she has children. Does her share go to them or is it divided among your other children? It helps to have a good idea before you see the professional.”
What’s the best advice you can offer for peace of mind in retirement?
Keith Wolak is head of the wealth and tax segment of the Valparaiso law firm Hoeppner Wagner & Evans, LLP. He is a lawyer and certified public accountant and has been with HWE since 1998. Wolak is certified in Indiana as a trust and estate lawyer.
“Retirement is more of a financial question than estate planning. I work with clients to help them organize and make sure they have the proper documents–a will or an advanced directive. The more pressing issue is making sure their ducks are in a row.
“I’ve had clients ask me, ‘Am I ready for retirement?’ We’re dealing with asset transference. How do I make sure you protect your assets and have control of those assets for the longest period of time? My discipline, which is estate planning, helps clients look for tax advantages and places to retain control of their destiny. We help them put in a safety net in the form of an advanced directive for financial and health decisions into the hands of the people they want.
“Twenty years out might seem to be too soon to start planning, but there could be a life event that could benefit from planning. That is something everybody should look at.
“You should not ask so much will I have the money, but will I have control. People like to put joint owners on accounts instead of listing power of attorney, but that can restrict control. Decisions like that have an impact. Proper estate planning will make sure control is maintained.
“Someone 20 years out might have the resources for planning but there are some without the resources. They might need to think about creating an estate with a life insurance policy or take some other steps to make sure final expenses will be taken care of. You need to think about these long before mortality stares them in the face.
“Organize what is going on around you. If your assets are so spread out and disjointed, it makes it more difficult to fit the pieces together, and that could cause extra probate expenses. Take a snapshot of where you are, then organize what you have to make sure your plan and objectives are coordinated.”
What are some of the steps that need to be taken to make sure you live the kind of retirement you want?
Connie Bauswell is the principal at the Law Office of Connie Bauswell in Valparaiso and Schererville. A graduate of the University of Dallas and the Indiana University School of Law, Bauswell is a Valparaiso native and a certified elder law attorney.
“My best advice is not to just plan for retirement when you’re well, but to plan in case you’re ill or disabled. Not many people want to think about death or disability or the what ifs, but those are very import.
“Life is a journey along a line that starts at birth and goes through adulthood. As we mature, we go farther down that line, and when we do, statistically things are going to happen. Our bodies might start failing us. Our minds might start failing us. We will all start experiencing those kinds of events. How are you going to live if you get sick?
“Long term care is expensive. On average, the stay in a nursing home is 2 years, and 50 percent of us will spend time there. Most people don’t plan for it. At the age of 85, incidents of dementia start showing up, and even folks younger can experience dementia of one sort or another.
“If you develop dementia, you need to look at how to privately pay for it. Do you have enough private money, or do you need some type of planning to obtain governmental funding for it?
“I’m not trying to sell a product. When I ask if someone has long-term-care insurance, most clients don’t have it. It’s either too expensive or they wait until they’re too sick to get it. It’s a choice. Some cannot afford it and some can afford it and choose not to get it.”
–Rick A. Richards