As people get older and ease into retirement, there are always finances looming overhead. It is also crucial to update your estate plan at this time, or establish one if you have yet to do so. What do you need to do to manage your finances most effectively for retirement, and when do you need to start thinking about it? Here are a few ideas that will help you manage your money in the best way possible as you get older.
Keep it Simple
Take a long hard look at all of your financial accounts. Ask yourself if you still need each account or if it is something that you can roll into another account or get rid of completely. A good example of this is if you have old 401Ks from several different employers. Rolling them into a Roth IRA or a traditional IRA could be a good option. Keeping things like this on one taxable account instead of several will help make your finances easier. This will reduce mistakes on your financial and tax papers.
There may be some cases where you need an extra account. For example, you might want to keep an emergency fund or investment for your kids separate. This is fine, as long as you keep in mind that it will make your finances a little more complex.
To further help you simplify, set up direct deposit for regular income, such as social security checks, to go into your bank account. Not only will this keep you from needing to go to the bank as often, but it will ensure that your money gets where it needs to go with less chance of human error.
The fewer investment accounts and bank accounts you have open, the less likely you are to be a target for fraud. It will also be easier to detect if you are a victim of fraud if you only have a few accounts to oversee. You need to make a master list of all your accounts once you have them in order. In the event someone has to help you with your finances, or you no longer have the capacity to handle them yourself, a master list will be very helpful.
A Helping Hand
Once you have all of your accounts simplified, you may want to consider finding someone you can trust to help you with your finances. The first step is to make sure your spouse is involved and you are both on the same page. Is there another family member or friend you trust? You can also hire a financial advisor if you want to steer clear of extra family involvement. Getting an extra person involved in your finances does not mean you need to turn total control over, it is just an extra set of eyes to make sure there is no suspicious activity. It also helps this person understand how you run and control your finances should the time come where they need to fully take over the responsibility.
Some families prefer the option of hiring a money manager so that they can spend time with their family members and enjoy their company while not stressing over the finances. If you decide to use an outside person’s help, you need to make sure they are qualified in money managing and finances. There is no regulation on this, so you need to do your research before giving out all of your information. The American Association of Daily Money Managers offers certification for money managers that requires a criminal background check and a written exam. You can go to the website and search for money managers that have this certification before making a final decision.
Estate Plan Ahead
There are several steps to take as you plan ahead for your finances. The idea is to plan all of this out well before you are incapable of managing your own finances. While planning for the worst may be a hard thing to do, it is necessary for everyone as they get older. A good place to start is by setting up a durable power of attorney.
Have a durable power of attorney written up with a person that you trust. As you continue forward with your plans, your trusted person will have full control over your finances should you become incapacitated or otherwise incapable of handling it on your own. While you still retain full capacity to make decisions, this type of power of attorney lets you change your agent or revoke the document entirely whenever you wish.
There are many other steps to take for proper estate planning. Check out our other blog here that goes over the most important documents required for a good estate plan in California.
If your finances are placed in the wrong hands, this could lead to abuse of your estate. It is best to consult an attorney that is well studied in elder law as you write up the durable power of attorney, so you can make sure you are safe from exploitation. The National Academy of Elder Law Attorneys is a great website to visit to find a specialized attorney within your area. If you need help with your estate planning in the Ventura County area of California, contact the Law Firm of Hathaway, Perrett, Webster, Powers, Chrisman & Gutierrez. We have handled thousands of estate plans, and we know how to help set up your documentation and keep them safe.
Having a will and testament is very important for any estate plan. Your will makes it so that there is no question within the family about how your financial assets will be handled when the time comes. It is possible to write this up yourself, but it’s better to have an attorney help. That way, you can make sure there are no unanswered questions and your wishes are carried out just the way you want them. If you’re interested, you can check out this blog to find out what happens when someone dies without a will in California.
Make sure to set up accounts for your long-term care and funeral costs. This could be a specific savings account that you deposit into, or it could be something built into your life insurance policy. Having this in place lessens the burden for you and your family.
Simplifying your accounts and getting all your finances and estate planning documents in place makes your elder years more enjoyable for you and your family. While at first it can seem scary and confusing, just imagine how much worse it would be to sort it all out when you are no longer able to do so on your own and your family would have to get involved. If in doubt, don’t hesitate to find financial and legal assistance to make sure that everything is correct and exactly how you want it. Proper estate planning is key, and the sooner you start to simplify, the better.
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