Most people understand the concept of retirement planning as it relates to the money you’ll have to live on after you reach a certain age and leave the work force. However, many more people are unaware of the importance of estate planning and fail to plan. Estate planning is about how you will be cared for in the event that you become incapacitated and how your estate will be handled when you die. When most people hear the term “estate plan” they think this is only for the very wealthy. Not so.
Anyone who has worked throughout their life and has been funding a 401k plan, owns a home and other assets needs to have an estate plan. In fact, retirement planning should include a comprehensive estate plan.
According to Employee Benefit Attorney, Brooks Hamilton, in an interview for PBS television’s Frontline, over 900 people in any given 1000-person retirement plan will retire in poverty or run out of money before they die.
In my experience as an Estate Planning & Asset Protection attorney, the biggest mistake I see people make over and over again is not taking advantage of the asset of time. Many people mistakenly believe they’ll have plenty of time for retirement planning once they buy a home, put children through college. But here’s what happens with that line of reasoning.
When you’re 20 years old, you think retirement is 40 years off, so you wait until you’re 30. Then, by the time you’re 30, you have a mortgage and kids and spend money like crazy, so you wait until 40. When you’re 40, the kids are in college, or your parents need help, so you wait until 50. Once you reach 50, too much time has been lost and your retirement savings is forever handicapped. That doesn’t mean it’s impossible, but severely handicapped.
The single most valuable asset you have when saving for retirement is time. And the sooner your begin your retirement plan you will want to establish a comprehensive estate plan as well.