Estate planning is generally meant to be a process that evolves throughout one’s adulthood. People’s situations and personal goals evolve throughout their lives, and therefore their estate plans need to change as well. Certain common life experiences are more likely than others to necessitate the creation or modification of estate planning documents.
For those who haven’t started estate planning yet, looming retirement can be the incentive they require to finally draft documents. For those who already have an estate plan, an upcoming retirement could be a reason to make major adjustments to those documents or add significantly to a basic plan.
What estate planning issues do people often need to address as they prepare for retirement?
Long-term care planning
One of the most important considerations as people age is the possibility of needing medical support later in life. Long-term care costs can quickly burn through retirement savings accumulated over decades. Contrary to what many people expect, Medicare typically does not cover many long-term care expenses. People have to plan in advance if they hope to qualify for Medicaid benefits or have cash on hand for long-term care needs later in life.
Asset protection planning
Living on a fixed income creates a degree of economic vulnerability. If people have unexpected expenses or fall behind on financial obligations, their resources can be vulnerable. Many people planning for retirement integrate asset protection plans into a broader estate plan to preserve their resources for their comfort as they age and the benefit of their loved ones after they die.
Incapacity planning
In addition to addressing care costs, people have to plan for practical medical support needs. They could develop Alzheimer’s disease and other debilitating medical challenges. Struggling older adults may not be able to manage their own affairs. Planning before retirement allows them to draft powers of attorney and other advance directives that clarify their medical preferences and empower a trustworthy person to handle their affairs.
Many people who have estate plans already in place may find that pre-retirement is a good time to update the beneficiaries they include and the assets they distribute in their wills. Reviewing and updating estate planning paperwork can be a smart choice for those preparing for retirement. Those who plan proactively can limit their personal vulnerability as they age.