Legacy Planning Considerations for Soon to Be or Recent Retirees

Are you starting to consider your “retirement age?” According to a 2018 Gallup survey, the average American expects to retire at age 66.[1] According to the research the number of people desiring to retire at age 60 continues to drop. In fact, research shows that the older you are, the more you consider continuing to work.

If you are considering your “retirement age,” you have probably started to calculate your standard of living, when social security will start, when your Medicare benefits begin, the amount of cash reserves you will need to supplement your healthcare costs or other needs. You may be considering withdrawals from your retirement assets as part of your funding plan. You may be planning to continue to work after you reach “Full Retirement Age” so you will want to make sure to plan accordingly so your earned income will not reduce your other available benefits.

If you haven’t considered it yet, you may want to consider how those retirement fund assets will impact your legacy for your spouse, your children and your grandchildren. When you first set up your retirement account, you most likely completed a beneficiary form naming a primary beneficiary (typically for married persons, this is your spouse) and contingent beneficiaries (often times, the account owner’s children). Now that you are considering retirement, you may wonder if you need to make changes to these accounts. The answer is “Maybe!” An average American who has worked for approximately 20-35 years and who has built sizable wealth in their retirement assets, may have reasons for making changes, while others may not. It depends on the number of beneficiaries named in the class of contingent beneficiaries, their ages, their own tax brackets, any sets of circumstances that may have evolved over the years (i.e. divorce protection, asset protection, creditor protection, etc.). Of course, many families with grandchildren begin to wonder about the likelihood of a grandchild receiving assets, at what age, what amount, etc. It should be noted that it is always advised to continue to name your spouse as your primary beneficiary to maximize deferred tax when gifting directly to your spouse.

There is no one size fits all to your retirement. It is your opportunity to create your legacy for your family! Congratulations to you on this amazing milestone!

[1] https://news.gallup.com/poll/234302/snapshot-americans-project-average-retirement-age.aspx.

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