Money 404: Coming To The End

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Money 403: Passing The Wisdom On

Near the end of your career, you’ll want to cash out your investments

Plan for your retirement

  • How will you spend your time?
  • What type of lifestyle will you have?
  • How much money will you spend each month?
  • How much will your healthcare cost?

Don’t be afraid to retire early if the situation calls for it

Be mindful of how long until you start receiving your money

Keep investing and saving until the last day of work

Don’t get hurt from collecting for retirement too early

  • If you collect on any after-tax retirement accounts before age 55, you will pay a heavy excise (penalty) tax on it
  • Don’t take Social Security until at least age 67, but preferably age 70
    • The longer you wait, the higher the amount you’ll collect
    • Social Security will only allow you to survive, so don’t expect it to help you to maintain your lifestyle
  • Don’t dump all of your savings out of the stock market
  • Idle cash can depreciate significantly over a decade from inflation

Be prepared for taxes on any tax-deferred investments

  • Sometimes you can avoid heavy taxation by moving the money into an after-tax account (like a Roth IRA) from your tax-deferred accounts (like an IRA)

If the situation is complicated, go over the details with a financial analyst

Listen to your body

If you can, work for a few more years to delay your retirement and boost your post-retirement lifestyle

Though you may be able to keep working, get an approximate timing of when you’re finishing your career

Don’t retire if you’re not excited about it

  • Most people who retire have no idea what to do with themselves afterward

Make arrangements for your new lifestyle

Downsize your home once the kids are gone to make your money last longer

If you want to move to another city or country, plan for it years before moving

Increase your health insurance, since your age will eventually catch up with you

Re-evaluate your life insurance needs when the children have moved out

Increase your charitable giving if you don’t need as much as you’ve saved for your lifestyle

Start lessening your work hours to prepare for your new lifestyle

Prepare for your death

Decide what will happen when you become ill and can’t handle yourself

Designate a power of attorney

  • There are many different types, but you should typically have a durable power of attorney

Designate a medical power of attorney for unforeseen medical expenses

Designate a trustee to honestly and accurately carry out your will

Minimize taxation with a living will

Run an experiment with a smaller gift if you’re not sure how your beneficiaries will respond

Set incentive rules on trust-held assets like reaching a certain age, getting a college degree or having a child

Try giving indirectly like funding a college they will go to

Start a non-profit family foundation or charity with the beneficiaries as the co-directors

Update your will to ensure your family and friends are still alive and want your assets

You need a new will if any of the following happens

  • Marriage, remarriage or divorce, since it automatically revokes a will
  • Buying a house or other valuable asset
  • Having children
  • Setting up or owning part of a business
  • Receiving an inheritance or substantial gift

Look into the different types of trusts you can set up

  • Make a revocable living trust to allow flexibility in deciding
  • Create a marital trust for your spouse to receive assets
  • Set up a pet trust if you need your pets taken care of
  • Make a spendthrift trust to deliver the trust in installments

Turn your trust into an incentive for your next of kin with requirements for them to receive assets

  • Income-match the income they make
  • Give a larger income-match for more worthwhile work, such as becoming a teacher versus a banker
  • Provide disbursements for specific goals you set for them

Self-made online wills are a one-size-fits-all solution and can’t always account for life’s complicated situations

  • You may unintentionally give someone more power over your estate than you want if you aren’t careful
  • Name the executor, who should be someone you trust right now while you’re still alive
  • Get signatures from at least two witnesses who aren’t beneficiaries listed somewhere on the will

Get a more advanced will written up with a lawyer

  • Research exactly what you’re getting into

Specify what will happen at your funeral and consider prepaying it

  • You’ll need to purchase a plot for your burial
    • If you don’t have one, you can buy a family plot for your next of kin
  • If you want cremation, you’ll need to work with a funeral director
  • Specify the maximum amount permissible for funeral expenses
    • The family’s payment on the casket
    • Whether you’ll be embalmed or only refrigerated until the funeral

Decide if you want to pre-pay anything while your family waits to access your money

  • Use a living will to more easily control the transfer of your assets

Make preparations for your digital life

  • Set up a master file of everything related to social networks or internet accounts
  • Include passwords and links to everything you’d like managed or erased when you’re gone

Keep all your papers in one place

  • Will
  • Letter of instruction
  • Birth certificates
  • Marriage certificates
  • Citizenship papers
  • Divorce/separation papers
  • Adoption papers
  • Social security numbers/cards
  • Passports
  • Driver’s licenses
  • Military records
  • Names/address/telephone numbers of healthcare professionals
  • Healthcare proxies/living wills
  • Medications, dosages and prescribing physicians
  • Address and phone numbers of hospitals of choice
  • Medicare and Medicaid numbers
  • Social worker or caseworker names and contact information
  • Passwords, websites, and other digital information
  • Income sources
    • Retirement and disability benefits
    • Social Security
    • Dividends and Interest income
  • Financial assets
    • Cash
    • Bank accounts
    • Stocks, bonds, mutual funds, money market funds
    • Retirement and pension plans
    • IRAs
    • Annuities
    • Life insurance and other insurance policies
    • Real Estate (property addresses, locations of deeds, forms of ownership, current values)
    • Automobiles, boats and other vehicles
    • Inheritances
    • Precious gems, collectibles, household items, hidden valuables/items in storage
    • Loans to family members or friends
  • Liabilities
  • Trust documents
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