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Why estate planning should go with retirement planning

On Behalf of | Jul 26, 2024 | ELDER LAW - Estate Planning

Planning and preparing for retirement are norms in society, which is why many begin this process when they are a young adult. Putting aside money for their retirement is often deemed essential; however, this is not the only preparation you should complete in your younger years.

Estate planning does not get the same attention as planning for retirement; however, it is just as important to complete. Nonetheless, the two processes have differences, making it important to understand what each does and the benefits it provides.

Understanding retirement planning

Retirement planning is a way to establish financial goals throughout your working years, allowing you to secure a retirement strategy. This requires much forward thinking, as you need to consider how you want to spend your golden years along with how you will afford this preferred lifestyle. Additionally, it involves the consideration of various scenarios that could occur in the later stages of life. This could include the need for living in a retirement home or requiring long-term medical care.

In basic terms, there are nine components you should consider in a retirement plan. This includes your set goals, an estimate of expenses, mechanisms to minimize taxation, indicating sources of income, establishing a withdrawal strategy, planning for social security, healthcare planning, plan for debt management and the ability to make continuous additions and modifications throughout your life.

Estate planning vs. retirement planning

Estate planning also requires forward thinking; however, it involves creating the arrangement for both the management and distribution of your property and assets following your death as well as during your life or in the event of incapacitation. Thus, the primary goal is to ensure your wishes are carried out and the fees and taxes are minimized.

There are six common elements in an estate plan. This includes a will, trusts, powers of attorney, advance directives, beneficiary designation and the ability to make ongoing adjustments, modifications and updates to these documents.

An estate plan and a retirement plan do not just complement each other, they are intertwined. In its entirety, they are a comprehensive financial strategy that captures all stages of your lifetime and beyond your life. And by continually reviewing and updating both, you can maintain a secure financial future and a solid plan for your beneficiaries.