How to Use Life Insurance to Pay Estate Taxes

When you’ve done your estate planning homework, you’ve laid a roadmap for your loved ones to take action quickly if and when something happens to you. This can ease a lot of concerns in the most difficult moments of their grief but it’s important for you to think about how all of your estate planning strategies work together.

Life insurance should be a component of your estate planning because it can help provide immediate liquidity in the event of your death and can be relatively simply transferred compared to some other assets inside probate that might be liquidated. Life insurance can also provide a way to pay for estate taxes.

A person who has a taxable estate above $11.7 million federally for an individual in 2021, allows for those payments to be made in the timeframe required of 9 months after death. There are many conversations happening right now about whether or not the estate exemption will be reduced which will make it even more important for people to consider the opportunities with appropriate planning.

Life insurance can be used to supplement your existing insurance plans when you’ve worked with the right lawyer.

When you find yourself in these difficult situations the insight of an experienced estate planning lawyer can go a long way towards answering your questions. For further information about how life insurance can be used as part of your overall plan, sit down with an estate planning attorney in your area to walk through the different scenarios and to craft a custom strategy for your needs.

 

Marathons & Markets

Lately, we’ve seen a meaningful uptick in market volatility fueled by economic instability here and abroad. From Chinese real estate woes threatening to disrupt their economy, to political wrangling in Washington that will continue to ripple through our own, there’s no escaping that the headlines have near-term market impacts around the world. But if the ups and downs have you worrying, don’t forget—you’ve trained for this!

Click here to download

 

 

Broad Versus Specific Language in Powers of Attorney: What to Know

You can create a general power of attorney which enables your financial power of attorney agent to make most decisions and financial transactions on your behalf or you might choose to name specific circumstances instead. Your individual considerations and concerns will come into play when consulting with an estate planning attorney about this important decision. 

You might choose to use broad language to give your agent all powers to manage your financial affairs in most cases but some powers are only given if they are specifically mentioned. It is worth specifically mentioning, for example, the power to designate beneficiaries of your insurance policies, the power to make gifts of your property or money and the power to change any community property agreements. Furthermore, some powers cannot be given to an agent, such as the power to update or create a will for you or the power to vote in public elections. 

You need to consult with an experienced attorney if you do not yet have a power of attorney document and want to create one to appoint someone else to take over and handle these important decisions for you if you become unable to do so. The support of a lawyer can help you identify a structure to this power of attorney document that meets your unique needs.       

How to Avoid the Financial Pitfalls of Being a Caregiver

Common Caregiver Pitfalls

It takes a special type of heart and selflessness to be a caregiver for a loved one but sometimes the best intentions can backfire. Most often it’s going to be the adult child or spouse that will act as the caregiver. But there may be other interested parties in the circumstances, such as siblings or stepchildren, with different motivations-nefarious or not.

One of the pitfalls I see with caregivers is the commingling of assets. It’s common for the caregiver to pay for groceries, or pay out-of-pocket for certain expenses for a loved one with the expectation that it will all balance out in the end. However, when it’s time to reconcile, everyone may not be on the same page and the caregiver may be out of this money.

We often see caregivers give up jobs or careers to care for a loved one. This may be an active decision made by the caregiver because of the belief that the loved one will take care of them. However, when there’s not clear communication to this regard, the caregiver can find themselves in a financially difficult situation if the family member being cared for as had a change of heart, or if other beneficiaries of the potential estate dispute the value of the services, or any renumeration at all.

Sometimes taking on the responsibility as a caregiver may bestow upon the caregiver a heightened standard. Are the investments be managed properly? Is the cash flow being tracked? Are the proper safeguards in place in the event of a fraud/theft? If the caregiver hasn’t put these things in place, will the caregiver face liability? Often the answer is no, but despite not facing potential legal liability there may still be a negative impact on relationships with other family members.

Neel’s Gift as the ‘Indian’ Cowboy

My parents moved to the US in 1973, I was born in 1975. For some reason, whether it was by omission or intentional – I didn’t learn English.

Imagine showing up for your first day of school, in the country in which you were born – having (a) avidly watched Sesame Street daily & (b) being fascinated with being an American cowboy , only to be placed in an ESL (English as a Second Language) class. 🙄

To be totally honest, I don’t remember what I felt at the time. I really don’t have distinct memories so I don’t think I was traumatized or set back in life anyway. What did happen was something beautiful. And last week, about 40 years later, I was reminded of it:

I was asked to help educate a group of Senior citizens via Zoom on Financial, Tax and Estate planning updates. All. In. Gujarati.

During the meeting, I got to look into the beautiful faces of 150 Indian-American couples who came to this country and raised the kids of my generation.

It was an honor to have spent the time to help those who have helped so many of my peers. The video is available here (https://youtu.be/xHJH7qcBKtI) in case you, or someone you know would like to see/hear it.

And as for the impact of not learning English until I started school? I guess it wasn’t too bad. Pinky and I did the same thing to our kids after all.

I can’t wait to see how they choose to give back when their time comes. Thank you Mom (Anjana) for this amazing gift!

By: Neel Shah 

What You Need to Know About Your Estate Plan and Gray Divorce

Are your financial plans tied to your spouse’s? If you’ve been married a long time, it’s impossible to ignore the possibility that your plans rely on the joint financial strategies or savings you’ve accumulated together. Which makes it that much harder to pivot if you get a divorce in your older years.

There are unique challenges that could affect your estate plan if you get divorced in your older years. Making a decision about what is most important for you should be the underlying reason why you seek out the support of an experienced family lawyer, but you might also need to visit your estate planning lawyer before and after the divorce is finalized. This is because there are many ways that your financial plan can be changed. If you get divorced you will need to update all of your existing estate plan materials. But you’ll also need to conduct a thorough evaluation of your retirement plan.

There is a good chance that any existing retirement plans and estate plans were built on the premise that you would still be with your now former spouse. In those circumstances, it can feel overwhelming to approach the prospect of updating all of your estate plans on your own.

You’ll want to make sure that all of your documents now reflect a new beneficiary including life insurance policies and retirement accounts that you might not have looked at in years. In those circumstances having a lawyer to guide you through the process and help you to avoid unfortunate surprises can be instrumental.

There are so many things to think about in the wake of a divorce and many changes that come in your life, but making sure that your estate plan still aligns with your individual goal should be a top priority.       

 

 

Understanding a Charitable Remainder Trust

Some individuals or families wish to leave behind a significant donation at the time that they pass away. A charitable remainder trust is one estate planning tool to help you do this. You’ll want to consult with an estate planning lawyer to decide whether or not this is the right instrument for you.

There are several different steps involved in the creation of a trust like this. The first is to meet with your lawyer to discuss your intentions and to ensure this is the appropriate step.

You will also want to make sure that your chosen charity is approved by the IRS. You can then transfer the assets that you intend to go to that charity into the trust and appoint the charity as the trustee of the trust. This gives the charity the power to invest or manage the property inside. Within the trust provisions created by your estate planning lawyer, there should be an explanation about who is to receive income from the property of the trust. This can be you, as the creator of the trust or someone else that you choose.

You may want to receive income payments for the rest of your life or for a predetermined number of years and you can discuss the various advantages and disadvantage of this with your estate planning lawyer. Any property remaining in the trust at the time you pass away will then be transferred to the charity. If you would like to discuss creating a charitable remainder trust, schedule a consultation with an estate planning lawyer today.

 

Should You Create a Trust to Handle Estate Planning for Stocks?

Creating an estate plan requires a holistic view of what you intend to accomplish and will require your consideration and thought. It is usually best done with the help of an experienced estate planning lawyer when you start the process.

One of the first things you will do is to create an overview or a list of all of your assets. You might find that an asset inside your estate are your shares of stock and there are a couple of different ways that you can handle this as part of your estate planning strategy. Your lawyer will sit down with you to discuss which of these makes the most sense. One option is to create a trust to hold the shares of stocks. Extra caution must be taken before transferring any title to a trust if the company in question is an S corporation.

The S selection could accidentally be destroyed in this process with invalid planning which could have significant tax consequences for the company. It is vital to get guidance from a knowledgeable attorney before creating any estate plan that has S corporation stock inside of it. There are benefits, however, to using a trust for the purposes of stock estate planning. The biggest is that ownership will transfer efficiently and smoothly after you pass away without requiring the oversight of the probate court. This is why you’ll want to discuss all of the options with your estate planning strategy with the help of an experienced attorney. You will be able to cover all of your bases and have a better perspective on what to expect.

Why Should I Hire an Attorney to Help Me with My Will?

Creating your own will is a common interest for many people who have had this on their to-do list for some time and are concerned about how to best protect their interests and cross this off their checklist.

Creating a DIY will is an alternative to hiring an experienced lawyer but it also comes with its own risks. A lawyer can provide instrumental insight in the process of creating your estate plan, including a will. Furthermore, your lawyer will be familiar with state and federal requirements as well as common reasons for which wills are challenged. A will challenge can slow down the administration of your estate when one or more beneficiaries believes that the will is invalid.

Your lawyer will help you match the document created with your planning intentions to create a plan that’s aligned with your future. This helps you know that if something happens to you, your loved ones are taken care of because of this advanced planning. A lawyer can also introduce you to estate planning strategies you might not have known about, too.

Having the support of a lawyer to create this document in the first place can decrease the chances of a successful will challenge and ensure that you have considered all of the most important aspects of your estate plan. A lawyer can also review your will with you on a regular basis to ensure that it’s in line with your individual goals as well as state and local requirements. You can make things much easier for your loved ones by having a will drafted by a knowledgeable attorney.

 

What To Know About Investing for Income in Retirement

If you are a few decades away from retirement, now is the time to evaluate your current savings strategy and to evaluate the need to make any adjustment. Investments can serve as an important source of income in retirement especially when retirees can tap into investments that pay dividends.

The primary purpose of using dividends is that you can get a source of income without having to reduce the balance of the account or withdraw from the account. You may shift from a growth oriented investment approach to investing for income as you get closer to retirement and you won’t need to devote your complete portfolio to this kind of investment. But it’s a good opportunity to reevaluate where you’re at and how close you are to where you want to go. 

Most retirees benefit from having income producing assets to support pension payment, social security and other sources of income. There are many different ways to develop income producing assets but these can include: 

  • Dividend stocks
  • Rental property investments
  • Real estate crowdfunding
  • Private equity
  • Passive income streams developed as a business

The more you think through all of these options the better you can provide a cushion for the most important years of your retirement. Passive income streams can be an excellent source of money for retirees but many of these need to be started years in advance of your actual retirement amount to support you, such as creating an online business. For more information about how all of these different streams of income can come together in retirement and how this can affect your personal savings plan as well as your legacy, set up a time to meet with a lawyer.       

What Are Tenants in Common?

Tenancy in common is a formal arrangement in which two or more individuals have ownership rights in a property or a piece of land. Each person who owns a portion of tenancy in common could own a different percentage of the total property or an equal percentage. This property type can also be residential. Tenants in common are eligible to bequeath their share of the property to anyone when they pass away.

Tenancy in common is also a distinct concept from joint tenancy. This is especially when it comes to the degree of ownership that each tenant maintains and survivorship rights. You can create a tenancy in common appointment at any point in time and members of the agreement are eligible to borrow against or independently sell their portion of ownership. Tenancy in common and joint tenancy have a few important differences. In a joint tenancy, tenants will get equal shares of a property with the same deed at the same point in time. In tenancy in common, a change in members doesn’t break an agreement. However, with joint tenancy the agreement is broken if any of the members decide to sell their interests.

Additionally, certain states name joint tenancy as default property ownership for married couples, whereas others would use the tenancy in common ownership model. This is why it is so important to set aside time to speak with an experienced lawyer about your unique situation and how you wish to leave property behind.       

How Will Social Security Benefits Impact Your Retirement?

Social Security benefits are an important form of fixed but recurring income for most retirees. There are many important details that you should consider in terms of incorporating these as part of your retirement plan and in conjunction with your estate planning strategy. Individuals in the United States can currently start receiving Social Security benefits at 62 years old.

However, the longer you can delay your retirement benefits will significantly increase your benefits. Waiting until the full retirement age of 70 will put you in the best position financially if you can survive until that point without those benefits. Each person’s situation is different so you need to be sure to consider the specifics of your situation and to discuss this with your financial professional. Selecting the benefits to work will help you make the right decisions and some of the most important factors to consider include your life expectancy, whether or not you have health insurance through an employer sponsored plan and any employment status. 

For example, if you plan to continue working you might want to delay benefits since you’ll have another source of income. However, it’s also important to note that many people end up retiring earlier than they expected so you’ll want to have a backup plan of what to do in the event that you need to make an exit from the workforce sooner rather than later. For more questions about how to create a comprehensive estate plan that addresses all of your needs, schedule a time to speak with an experienced lawyer.       

 

Using Life Insurance for Greater Liquidity as An Estate Gift

 

Do you have a life insurance policy to support your loved ones if something happened to you? Without one, you’re leaving them exposed to risk. Many people use life insurance as one vehicle to pass on assets to their families.

Leaving behind assets to your loved ones is a common goal for anyone creating their estate plan but when you don’t think carefully about the tax environment or the methods available to you to leave behind assets, you could leave your family members facing unnecessary problems.

Life insurance might assist in the payment of estate taxes. This is because for those people who have a taxable estate above $11.7 million federally in 2021, life insurance can be an important way to provide instant liquidity to pay that tax.

Those taxes are due 9 months after death, however, if a life insurance policy in question was owned by the deceased, this can also give family members immediate proceeds to help pay for other expenses, such as being reimbursed for funeral costs. There are several different ways that you can use life insurance as part of your bigger estate plan but you need to be prepared to consult with an experienced attorney to walk through your options and get a better understanding of what to expect and how to avoid some of the most common mistakes made in using a life insurance policy. You can help support your loved ones by working with a lawyer well in advance.

Enforcement Against Self-Directed IRA Scams Doubled in 2020

The danger of self-directed IRA scams heightened during the pandemic, as many investors were at home and online but isolated from in-person interaction, NASAA says.

The number of investigations and enforcement actions by state securities regulators remained largely steady during the COVID-19 pandemic, though the total amounts of restitution and penalties/fines each decreased by about half between 2019 and 2020, according to the North American Securities Administrators Association’s annual enforcement report released this week.

But the number of state enforcement actions focused on self-directed individual retirement accounts (IRAs) more than doubled, from 24 in 2019 to 53 in 2020. Joseph Borg, the director of the Alabama Securities Commission and the co-chair for NASAA’s enforcement section, said the danger of self-directed IRA scams heightened during the pandemic, as many investors were at home and online but isolated from in-person interaction.

Related: New NASAA President to Prioritize Expungements, Digital Assets

“That became the new trust vehicle for con artists to convince folks that ‘you’re not sending the money to me. You have control over it,’” Borg said.

With self-directed IRAs, investors can use tax-deferred retirement funds from traditional IRAs to purchase “alternative” investments that are not typically accessible; some self-directed IRAs allow people to invest in certain digital assets and cryptocurrencies, according to NASAA. But these options are usually directed at investors with particular interests or expertise in unconventional options, not the typical investor. Additionally, custodians for these IRAs do not tend to work like a typical IRA’s custodian, according to the NASAA report.

Related: NASAA: Nearly 60% of State Advisors Lack Procedures Protecting Senior Investors

“Specifically, (self-directed IRA) custodians generally do not have the fiduciary duties associated with investment advisers,” the report read. “This lack of services, and protections, is fertile soil for scammers.”

Once a victim rolls over their 401(k) and IRA savings into the self-directed accounts, the schemer can access them, depriving the investor of their retirement savings, according to NASAA. Borg said self-directed IRAs were enticing tools for scammers because while investors were familiar with IRAs, they wouldn’t necessarily understand the difference between a traditional IRA and a self-directed equivalent.

NASAA conducts an annual survey of all U.S. members (the survey for 2019 found state regulators collected $700 million in total investor relief that year). Last year, states initiated 5,501 investigations and reported 2,202 enforcement actions in total, including 206 criminal actions, according to the report.

According to Joe Rotunda, the enforcement director for the Texas State Securities Board and vice chair for NASAA’s enforcement section, there were an additional 2,572 investigations that carried over from previous years, with 8,073 investigations in total. State regulators initiated 497 against registered parties, including 153 investment advisors, 115 IARs, 110 broker/dealer firms and 119 b/d agents. States also brought 619 total enforcement actions against unregistered parties in 2020, including 20 unregistered financial planners.

In total, $306 million was ordered returned to investors via restitution in 2020, compared with $634 million in the prior year, while there was $42 million in fines or penalties, a drop from $80 million in 2019, according to the report. In mulling the contrast between enforcement action rates and the drop in monetary restitution and penalties, Borg argued that investigations were less likely to be impacted by remote working, as investigations could still be opened and documents received and analyzed when working from home last year.

But Borg believed there would be a lag in criminal proceedings, though he speculated that was more likely to show up in next year’s data. He noted that restitution was often part of the criminal system, and often came near the conclusion of investigations.

“I do think we saw a slowdown on the criminal side,” he said. “But remember, there’s a time lag between opening up an investigation and moving forward on the cases.”

Earlier this week, NASAA announced a new campaign, partnering with the Financial Industry Regulatory Authority and the Securities and Exchange Commission’s Office of Investor Education and Advocacy to urge investors to supply financial firms with a trusted contact. That person could be contacted by the firm in certain circumstances, including if there is suspicious activity in an account or if the investor cannot be contacted.

“All investors can benefit from adding a trusted contact to their account—having one or more trusted contacts provides another layer of security on the account and puts the financial firm in a better position to help keep the account safe,” FINRA President Robert Cook said about the initiative.

By: Patrick Donachie

Sources: https://www.wealthmanagement.com/regulation-compliance/enforcement-against-self-directed-ira-scams-doubled-2020

 

Does My Executor Need to Use an Attorney for the Estate?

You are probably doing your own due diligence to ensure that your chosen fiduciary, also known as an executor or personal representative, has everything they need to make probate simple. However, there are some circumstances when it might also make sense for this fiduciary to get the support of an experienced attorney.

This can be especially helpful in the event that your loved ones do not tend to get along and in cases in which you believe that someone may challenge the estate itself or the executor’s actions. It might make sense to you how you have organized your probate related property and your estate plan but that’s of no use if your executor cannot figure it out on your own. Most states do not require an attorney to represent the estate but some executors choose to do this as additional peace of mind and confidence. The executor has the responsibility to hire an attorney to represent the decedent’s estate so you might wish to discuss this with your chosen executor so that they know they have this option.

Executors can also be held liable in the even that something goes wrong, so when an executor selects an attorney to guide them through this process, it is often so that they feel more comfortable taking on this role and handling the process in the appropriate order. The help of a lawyer is instrumental in assisting an executor or personal representative with covering all of tehri duties cohesively.

Haven’t made your plan yet or can’t figure out who to name as executor? Contact a dedicated lawyer for assistance with your planning process from beginning to end.

 

How to Educate Your Executor About Limiting Their Liability

One of the most important aspects of serving as an executor or personal representative is the duty of loyalty. There is a high level of trust associated with someone serving as a fiduciary and the more that you can do on your own estate plan to make them feel comfortable about this role but also clear about this level of responsibility, the easier it will be for them to step into this position in the future.

You might educate them about the specific liability rules in your state and give them action steps to make them feel more comfortable of serving in this position. Here are some dos for limiting executor liability:

  • Keep accurate and clear records
  • Inform beneficiaries about the amount and nature of their interest in the trust or estate
  • Keep control of all trust or estate property
  • Segregate trust and estate property from any other property
  • Exercise reasonable skill and care to make trust property productive, such as making it income generating
  • Supervise the activities of all agents

When someone is not familiar with what it takes to serve as a personal representative or an executor, they can find themselves in over their head. They might even need to hire an experienced probate administration lawyer to assist them with this process which can cut down on the overall funds available in the estate. If you want to avoid this situation, make sure that your executor feels confident about serving in this position. Speak to a lawyer about your next steps if you have not yet named an executor for your future.

 

Will Infation Hurt Stock Returns? Not Necessarily.

Investors may wonder whether stock returns will suffer if inflation keeps rising. Here’s some good news: Inflation isn’t necessarily bad news for stocks.

A look at equity performance in the past three decades does not show any reliable connection between periods of high (or low) inflation and US stock returns.

Since 1991, one-year returns on US stocks have fluctuated widely. Yet weak returns occurred when inflation was low in some periods, and 23 of the past 30 years saw positive returns even after adjusting for the impact of inflation. That was the case in the first six months of 2021, too (see Exhibit 1).

Over the period charted, the S&P 500 posted an average annualized return of 8.5% after adjusting for inflation. Going all the way back to 1926, the annualized inflation-adjusted return on stocks was 7.3%.

History shows that stocks tend to outpace inflation over the long term—a valuable reminder for investors concerned that today’s rising prices will make it harder to reach their financial goals.

Sources: Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

How Is an Estate Guardian Different from a Minor Guardian?

In the event of incapacity or death, you probably have estate planning strategies in place to help you and your loved ones adjust. Many people think about the estate planning process as the process of planning for people. You are planning for the people that you leave behind, and some of the most important people to think about are your children.

This means thinking carefully about whether or not you need a minor guardian. If you and the other surviving parent are no longer able to care for your child because of a sudden accident or death, that child will still need a guardian and you have the ability to name the person you want to serve as guardian through the court. There are two different types of guardians to evaluate as part of your estate planning. The first is the guardian of the person and the second is the guardian of the estate. The personal guardian is the individual who is responsible for taking care of day to day needs like shelter, clothing, food and medical care. The guardian of the estate, however, is responsible for managing the property and the money of the person who needs a guardian.

These individual roles are very important and should be evaluated carefully with you and the other parent should you both be on the same page about what will happen to your child. Having these conversations now is not easy but can be important to reduce the stress and frustration in the future. Do not hesitate to get help from an experienced and knowledgeable lawyer right now.

 

Tuning Out the Noise

For investors, it can be easy to feel overwhelmed by the relentless stream of news about markets. Being bombarded with data and headlines presented as affecting your financial well-being can evoke strong emotional responses from even the most experienced investors. Headlines from the so-called lost decade– the 2000s, when the S&P 500 ended below where it
began–can help illustrate several periods that may have led market participants to question their approach.

*March 2000:
Nasdaq Stock Exchange Index Reaches an All-Time High of 5048*April 2000:
In Less Than a Month, Nearly a Trillion Dollars of Stock Value Evaporates*October 2002:
Nasdaq Hits a Bear-Market Low of 1114*September 2005:
Home Prices Post Record Gains*September 2008:
Lehman Files for Bankruptcy, Merrill Is Sold

While these events are more than a decade behind us, they can still serve as an important reminder for investors. For many, feelings of elation or despair can accompany headlines like these. We should remember that markets can be volatile and recognize that, in the moment, doing nothing may feel paralyzing. However, if one had hypothetically invested $10,000 in US stocks
in January 2000 and stayed invested, that would be worth approximately $32,400 at the end of 2019.1

When faced with short-term noise, it is easy to lose sight of the potential long-term benefits of staying invested. While no one has a crystal ball, adopting
a long-term perspective can help change how investors view market volatility and help them look beyond the headlines.

THE VALUE OF A TRUSTED ADVISOR
Part of being able to avoid giving in to emotion during periods of uncertainty is having an appropriate asset allocation that is aligned with an investor’s willingness and ability to bear risk. It also helps to remember that if returns were guaranteed, you would not expect to earn a premium. Creating a portfolio investors are comfortable with, understanding that uncertainty is a part of investing, and sticking to a plan may ultimately lead to a better investment experience.

However, as with many aspects of life, we can all benefit from a bit of help in reaching our goals. The best athletes in the world work closely with
a coach to increase their odds of winning, and many successful professionals rely on the assistance of a mentor or career coach to help them manage
the obstacles that arise during a career. Why? They understand that the wisdom of an experienced professional, combined with the discipline to forge ahead during challenging times, can keep them on the right track. The right financial advisor can play this vital role for an investor. A financial advisor can provide the expertise, perspective, and encouragement to keep you focused on your destination and in your seat when it matters most. A survey conducted by Dimensional Fund Advisors found that, along with progress towards their goals, investors place a high value on the sen se of security they receive from their relationship with a financial advisor, as Exhibit 2 shows.

Having a strong relationship with an advisor can help you be better prepared to live your life through the ups and downs of the market. That’s the value of discipline, perspective, and calm. That’s the difference the right financial advisor makes. For a short video on this topic, please see
us.dimensional.com/perspectives/tuning-out-the-noise.

Sources: Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

 

What to Consider a Safe Withdrawal Rate in Retirement

The concept of a safe withdrawal rate is important for thinking about your retirement. Knowing how much you might need to take each year to adjust for inflation and other unexpected costs will help you avoid financial challenges down the road. How do you know what’s enough to support you possibly for years to come?

The difficulty with determining a safe withdrawal rate is that there are so many factors that can influence what safe looks like for you. For example, the basic recommendation for retirement withdrawals is to take no more than 4% of the investment total value every year. The primary basis of this that proves problematic is that a retiree’s financial situation needs remain much the same for many years or even decades for this to be a safe approach.

A more cautious approach is to look at a 3% withdrawal rate which gives you a good starting point to consider what’s most important and unique to you. After you have thought about an appropriate withdrawal rate, look back at your portfolio to evaluate your living costs.

Can you make additional changes to your retirement, such as delaying your social security retirement age, continuing to work part time in retirement or reducing your expected retirement expenses? There are many other components that go into thinking about your retirement planning, such as longevity, health care costs, and your estate planning goals. All of these should be completed when thinking about your holistic estate planning and retirement planning strategy.