Why Is Planning Ahead For Minimizing Taxes So Important In Retirement?

Taxes are one of the most certain things in life, but they often catch many retirees off guard. Planning now for potential tax consequences in the future will help not just you, but also when you establish your estate planning strategies for passing on assets to your loved one. Too many seniors enter their golden years unprepared for the impact on taxes and may need to adjust their estate plans as a result of the impact on other financial accounts.

One study, for example, found that 36% of current retirees said taxes cost them much more than they had planned for and another 23% said they’ve not done any tax planning for their retirement at all. Planning ahead for minimizing taxes in your older years can help you live a comfortable retirement.

There are multiple things to consider, such as the type of retirement accounts you use, your age, when you intend to take Social Security, and additional investments. Understanding how these all work together and can impact each other can help you make plans for a comfortable retirement and help you ensure that you’ve selected the right assets to pass on to your loved ones either while you’re still alive or after you pass away through your estate plan.

Set up a time to meet with a qualified and dedicated lawyer in Virginia Beach to assist you with your next steps. We’re here to help you create a customized plan based on your needs and wishes in your estate.


Americans Are Retiring Later In Life. What Does This Mean For You?

Research shows that Americans are now retiring as many as four years later in their life than they did when compared to 30 years ago. Gallup, the Center for Retirement Research and the American Enterprise Institute have all conducted research studies to find the average retirement age.

Deciding the right age to retire is a personal decision and might be based on a variety of factors. For married couples where both parties work, they might be trying to time their retirement dates together. For a single person, they might want to work as long as possible to maximize withdrawals from retirement accounts. This new trend in retiring later is quite different from retirement age traditions in the past.

For much of history, beginning after the Civil War, the trend had actually been going in the other direction with people retiring younger. However, that number started climbing back up in the 1990s.

Some of the most common reasons for the retirement age to get later include:

  • Changes in the Social Security program, when the program’s full retirement age went from 65 to 67, in the 1980s.
  • Generational shifts in the 401(k) program.
  • Health insurance consideration benefits.
  • Living longer and healthier lives.

As you think about protecting your own retirement in these later years, it’s very important to work with a qualified and knowledgeable estate planning attorney. An estate planning lawyer can help you with a variety of different tasks associated with planning your retirement as well as aligning your estate planning objectives with these goals.



How To Protect Your Retirement Funds From Too Much Inflation

Inflation written on newspaper chartMany people are feeling the day to day impacts of significant inflation and it’s important to look ahead for any way you can possibly minimize these impacts in the future. You may be relying on your retirement for 20 or 30 years or longer, so having strategies that allow you to accumulate as much as possible now and also to pivot in the future in the event that your strategy is not accomplishing what you need is extremely important.

Speaking with a dedicated estate planning lawyer can help you to craft comprehensive plans to address these issues. When it comes to looking ahead and being aware of the possible impact of inflation, here are some things to consider:

  • Invest in assets that helped to maintain your purchasing power over the course of time. For investors who are relatively young, a stock heavy portfolio or inflation protected commodities and bonds may be beneficial.
  • Avoid holding too much cash in checking and savings accounts to pay for everyday expenses. You will be able to purchase fewer services and goods each year with your cash, so it is better to invest these.
  • Evaluate the possibility of delaying Social Security payments. Your payment will increase for every month that you can delay taking your Social Security payments between the ages of 62 and 70 and up until age 70. If you do not need these funds immediately, you can increase your cash flow by pursuing this strategy.

Coordinate your retirement planning and your long term care planning by working with a talented estate planning lawyer in Virginia Beach, VA.

What Does Contingent Beneficiary Mean on My Retirement Form?

You must designate individual beneficiaries for your retirement plans at the time you establish these accounts as well as on an ongoing basis if the needs of your life change. The easiest way to think about this is that your primary beneficiary might be the one person that you choose to receive assets from your assets account if you pass away before you are able to use all of the assets inside. In most cases, this will be your spouse.


A contingent beneficiary, however, is the person who is eligible to receive these assets if the original beneficiary passes away first. It is a good idea to always name a contingent beneficiary so that you can keep all of the benefits of having retirement assets like those in a 401(k) pass outside of probate. You may wish to revisit your primary and contingent beneficiary plans on an annual basis or after every major life event. For example, you might want to update your retirement plan beneficiary if you have recently gotten divorced.

This is a commonly overlooked aspect of post-divorce planning which means that your ex-spouse could be legally entitled to receive assets from your retirement account if you fail to update this account accordingly. Set aside a time to speak with an experienced estate planning lawyer about the best options for your retirement planning future.

Make sure you review your beneficiary forms at least on an annual basis. If anything changes in your life, such as the birth of a new grandchild or the death of a primary beneficiary.

Our estate planning law office can help you with your beneficiary forms, although they will be filed directly with the company maintaining the account.



Study Shows Retirement Targets Have Shifted

The COVID-19 pandemic presented a unique set of challenges for financial and retirement planning and now investors are looking ahead to the future with different priorities. A recent research study from Northwestern Mutual shows that over one third of Americans have pushed back or moved up their target retirement age directly as a result of the Covid crisis.

One quarter of those who participated in the survey said that they plan to retire later than expected even though 11% said they plan to retire earlier. The vast majority of those who are planning to delay will push out somewhere between 3 and 10 years.

The youngest generations participating in the study intended to leave the workforce before age 60. Some of the top reasons most people in the study are delaying retirement have to do with the desire to save money and work while also getting flexibility in their workplace.

Other concerns include the rising costs for medical and health care issues and direct withdrawals that were made from retirement savings during the pandemic. Another group of people had also had to take care of friends, relatives or additional dependents during the pandemic.

Together, your retirement plan and your estate plan work hand in hand to support your needs and help you adapt for life after you stop working full time. From income streams to giving to long term care, having the help of a Virginia Beach estate planning lawyer can be instrumental in covering all your bases.

If you are curious about how to align your estate planning in your retirement goals, do not hesitate to reach out to an experienced and dedicated estate planning lawyer.


Study Shows Women Are Rarely Involved in Couples’ Retirement Planning

When you and your partner are thinking about your future together in retirement, have you had conversations to get on the same page about your savings and expense strategies? Retirement is a lifestyle adjustment, especially when you’ve been used to working regularly and relying on that consistent income to pay your expenses.

When saving for two or combining two different retirement savings strategies for a married couple in Virginia, it’s key to think together about how you will make it work.

A new study identified that over 1/5th of women have no part in retirement planning as part of a couple. The Fidelity Investments’ couples and money study discovered that although 57% of survey respondents indicated they are joint decision makers on long term financial goals and retirement, over half of all non-retired couples disagreed on how much money they’d need to have set aside in order to retire comfortably.

Many of them have a discomfort level when it comes to talking about money which could also generate problems as it relates to estate and asset protection planning.

Over 22% of women involved in the study say they had no or little involvement in retirement planning. Women cannot afford to ignore the impact of potential retirement planning particularly given their higher rates of longevity. Women are also often entering retirement with fewer resources than their partners, making it more difficult to have the appropriate amount of money set aside to pay for a comfortable retirement.    

Don’t wait to talk about retirement.


Can a Charitable Remainder Trust Be Used to Generate Income in Retirement?

What if you were able to accomplish multiple goals in creating a trust at once, such as avoiding capital gains taxes, selling a highly appreciated asset and creating a steady stream of retirement income for your loved ones? These are just a few of the most common pros of choosing a charitable remainder trust.

A charitable remainder trust is an irrevocable tax exempt trust that serves for the purpose of reducing your taxable income. These are becoming much more popular because they can reduce your tax liability overall. This is known as a split interest giving vehicle, meaning that the assets inside the trust are split between two different beneficiaries.

The initial beneficiary, which is usually the creator (you), a person you name and a charitable organization. There are a few different kinds of charitable remainder trusts but the vast majority of them function in the same way. The grantor who creates the trust contributes assets into it. This can be anything from cash to property to shares of stock or even artwork.

You’ll usually want to contribute something that is capable of appreciating in value and the terms of the trust from that point on are those that you set. Speaking with a trusted Virginia Beach estate planning lawyer can help you to determine whether or not a charitable remainder trust makes sense for your individual situation.


Study Shows More Americans Want to Retire Early

Have you thought about your intended retirement target age? For most people, turning 65 means leaving the workforce at least in a full time role, but that has been shifting over recent decades as more people stay longer in their positions for financial reasons or just not wanting to leave the workforce.

But a new trend is impacting potential retirement numbers and savings amounts: more Americans want to retire early. Studies show that one-third of employees under age 54 want to retire by the time they reach 55. Hearts & Wallets found that nearly 40 percent of consumers of all ages want to retire before 65.

Households closing in on that target age of 55 for their own retirement have some characteristics more likely to make them successful. They spend less on housing, are open to financial advisor, use investment products, and have lower student debt amounts owed. But these are hindered by things like high credit card debt and low savings rate.

Behavioral changes in this area could help them get back on track, but this is just as important as engaging with a team of experienced professionals to ensure that these pre-retirees have covered all their bases.

From a financial advisor to an elder lawyer to a CPA, there’s a lot to think about as you approach older age. Both from the perspective of enjoying this chapter of your life and making sure you have safeguards in place to protect you, you need a holistic plan that takes all these unique facets into consideration.

For more help, schedule a consultation with an estate planning lawyer.

Three Tips to Maintain Your Savings in Retirement

Approaching retirement means thinking about your finances and your working life differently. For plenty of soon-to-be American retirees, it’s just as important for them to protect their savings as it is to have a good plan for spending it during their retirement years.

There are many different risks that can impact retirement plans today, most particularly, their impact of long-term care expenses. Three tips can help retirees be more mindful of the balance inside their retirement savings accounts and how best to protect it. The first of these is to look for a fiduciary or a financial advisor who will put your best interests ahead.

There are many different financial professionals who are targeting the retiree market for those who are high net worth. It’s a good idea to work with someone who has a fiduciary responsibility and will help you understand where you are at now and where you hope to be in retirement. The second step is to make sure that you have an advanced wealth planning strategy and a relationship with an estate planning lawyer.

An estate planning lawyer could help you see some of the different ways that your retirement plan could be affected, not only to support you in your older years but to leave gifts behind for your loved ones. Finally, think about the big picture.

Maintaining wealth goes beyond income and investment returns. Look for advice from a variety of professionals that can help you better understand things like health care planning and taxes. For more information about drafting a retirement plan that aligns with your estate planning goals, schedule a consultation with an estate planning lawyer in Virginia Beach today.



Three Changes to Retirement Savings That Might Impact You in 2021

The CARES Act or the Coronavirus Aid Relief and Economic Security Act gave some significant benefits to retirement savers in 2020. However, the disappearance of these in 2021 means you may need to consider alternative planning options. The first major change has to do with required minimum distributions. In 2020, the CARES Act enabled savers to skip required minimum distributions. However, these will need to be restarted in 2021. The second change relates to retirement plan withdrawals.

Under the CARES Act individuals younger than age 59 and a half are eligible to remove up to $100,000 from their retirement accounts without being subjected to the typical 10% penalty. The early withdrawal penalty, however, is back in effect in 2021 so don’t make any sudden changes or removals to your retirement plan anticipating that you may be able to leverage this now expired benefit.

The third issue relates to retirement plan loans. Savers with particular 401(k) plans were eligible to borrow as much as $100,000 from their accounts and to defer payments on those loans for a year. Although that change has been expanded into 2021, you’ll need to be with your financial professional to determine if you meet the qualified disaster requirements to do so.

The amount you are eligible to contribute to retirement plans in 2021 hasn’t changed. IRA investors can set aside up to $6,000 and those who are older than age 50 can set aside another $1,000 for a total annual contribution of $7,000. For more information about how this might affect your estate plan, set up a consultation with a lawyer in Virginia Beach.