Life and Death Planning for Retirement Benefits: A Simple Guide

Retirement benefits play a foundational role in building financial stability after leaving the workforce. However, that’s only part of the bigger picture when it comes to retirement investments and assets.

Life and death planning for retirement benefits helps to make estate planning and transfers to heirs more simple.

The loss of a loved one can be a difficult, emotionally draining experience, to say the least. Unfortunately, processes like probate can add to that stress. Designating beneficiaries ahead of time can reduce the burden placed on your loved ones after you pass.

Having a complete plan for your assets, during retirement and once they pass on to your heirs, is in your best interests. Let’s take a closer look at life and death planning for retirement benefits. We’ll focus on a basic foundation, especially important needs across the retirement planning timeline.

Starting the Process: Where to Begin With Retirement Planning and Retirement Benefits

A smart approach to retirement planning begins with intention. In other words, you need to understand your financial position currently and key goals and needs for your future in retirement. The AARP explains defining your retirement is the first step in early retirement planning.

You don’t need to create a complete list of all retirement goals as you start the process. However, starting to develop goals now means you can make more informed decisions about retirement benefits and investing.

Keep in mind that these goals can and often do change over time. As you age and your lifestyle changes, new costs and opportunities can come into play. You may take on a consulting role and earn additional income, or provide financial support for your grandchildren.

Retirement planning starts with defining your goals and continues as you update them in the future.

A full accounting of your retirement savings and other assets helps guide many decisions related to retirement. Many benefits for retirees are based on investments and allocations. Reviewing and adjusting those investment decisions in the context of your specific retirement goals can help you get closer to achieving them.

Even when defined benefit retirement plans, i.e. pension plans, are a major source of retirement income, it’s important to fully understand them. How much can you expect to earn in monthly benefits from your pension? How big is the gulf between that income and the total amount you’ll need to fund your retirement each month?

Here are some more specific considerations to think over as you approach retirement. Answering these questions can provide valuable context when making decisions related to retirement benefits:

• When do you want to retire? Many people have a general idea about their retirement timeline, but not a specific age or date in mind. Start to think about the timeline.
• Do you want to fully retire? You may want some supplemental income in retirement, or truly enjoy your career. Either way, think about if continuing to work makes sense, and what you want that arrangement to look like.
• What do you want to do in retirement? How you plan to spend your time and money will influence what you need to save and your retirement investment strategy. Think about what’s important to you from a “wants” perspective.
• What will you need in retirement? Long-term care, home upkeep, and other needs are foundational expenses. Pay special attention to the costs associated with these needs.
• How will Social Security and Medicare come into play? Social Security and Medicare can offer valuable support, but are highly complex programs. A retirement advisor can help to find a strategy for both that aligns with your needs.
• How will you handle taxes in retirement? Many retirement benefits are taxable when payouts are made. Others (specifically Roth accounts) involve paying taxes when making deposits. Working with a tax planner to reduce your tax burden in retirement puts more money back in your pocket.

Have you started to develop your retirement goals and want to get more specific about numbers and other financial specifics? Our retirement benefits calculator and similar tools can help you dig deeper into the long-term aspects of retirement planning.

Life and Death Planning for Retirement Benefits: The Importance of an Estate Plan and Beneficiaries

Eventually, your remaining retirement assets will be passed to your surviving spouse, children, or other heirs and beneficiaries. Death is an especially difficult topic to plan for. For many people, the motivation comes from protecting their loved ones after they pass away.

As you begin to take the long view of retirement planning and retirement assets, keep these three needs in mind:

Create an Estate Plan

An estate plan dictates where your assets will go after you pass away. It’s your opportunity to designate family, friends, nonprofits, and other organizations as recipients of your assets.

Establishing will and trust can help to define who will receive your assets. This means your family will have less or even no exposure to the probate court process. That can lead to reduced stress and less complex decision-making during an especially difficult time.

We also strongly recommend making a list of where retirement accounts are held and contact information for each company or provider. A paper trail helps your loved ones access the assets that you want to provide to them.

Once you establish a will and trust with the help of an attorney, be sure to regularly review it and update it as necessary.

Designate Retirement Benefit Account Beneficiaries

Certain retirement assets, like life insurance policies, 401k plans, and IRA accounts, give you the ability to include named beneficiaries. As law firm Hoopes, Adams & Scharber, PLC explains, designated beneficiaries take precedence over any statement or wish expressed in or by a will or trust.

That means it’s especially important to occasionally review and update your beneficiaries as well. As time goes on, circumstances change. Updating your beneficiaries as needed helps to keep your estate plan working as intended.

Finding Knowledgeable Support for Retirement Planning

Dechtman Wealth Management staff take a fiduciary oath, meaning our team always acts in our clients’ best interests. Our financial advisors can provide support in the earliest stages of planning for retirement through to the strategic development and updating of an estate plan. We can even help you find a reliable estate attorney to draft the official paperwork.

Ready to learn more about taking a complete, life-and-death planning approach to retirement benefits? Schedule your complimentary assessment now.