TROTTER: Estate and financial planning fundamentals

For this column, we will discuss those areas of estate and financial planning for the age group I will refer as “age 50 and older.” Obviously, we’re dealing with a wide age span for people in this group that pairs those of the World War II generation along with the Baby Boomer generation that followed behind. And, it is an interesting financial contrast: for with the WW2 age group, we have the greatest savings group of any generation in American history, while Baby Boomers represent the greatest spenders of any age group. But, in my opinion, the common thread that binds these two factions together deals with two primary issues: asset conservation and building economic wellbeing.

With this, we come face to face with a fundamental question and that is; where are the areas of financial risk in our lives? What steps need to be taken to offset a financial calamity? And, more to the point, how much money will be needed in the future to retire comfortably, and for how long will it be needed. In no particular order, here are a few areas to make sure that the basics are covered:

» Financial and personal assets are in order: By that I mean these matters are arranged and organized. It also means they are made known to those, such as children or loved ones to whom you wish to pass them on. In far too many situations, leaving matters to children and survivors to hunt or “scrounge” through one’s home and/or bank lock box is no way to have one’s life organized.

» Legal Arrangements are in place and communicated to loved ones: The importance of making sure that legal arrangements are in place cannot be overemphasized. Certainly, for people in this age group, it is critically important that plans are in place, current with existing tax laws and made known to those people in charge of carrying out your wishes.

» Review your debt load: Most probably, 20 to 25 years ago, I wouldn’t be making note of this. However, an unfortunate statistic today is the fastest growing debtor group in our country is the retired and elderly. With more and more deciding to refinance, relocate or purchase a new home, it makes good sense, in taking on that kind of mortgage debt, not to spread it out beyond the age of 65 to 70.

» Adequate healthcare: These are really two issues pertaining to this: Number one is making sure that adequate medical care is in place and secure. For those under age 65, there is no greater need. This is especially true now days with so many dependent on employers for health care coverage. For those 65 and over, it is important, in my opinion, to carry additional “MediGap” coverage to pick up the many additional expenses not covered by basic Medicare. However, this only covers one side of health care protection. The other part points to the additional expenses of extended care or long-term care. Unfortunately, far too many continue to bury their heads in the sand rather than face the reality of this situation. And, it affects the entire family – not only emotionally, but financially, as well.

» Liability Protection: As discussed last month, we live in a more litigious society than 25-50 years back. Due to this, it is extremely important that our assets are protected as well as those situations where an accident or event could put us at personal fault.

» Review housing arrangements: For many elderly and retired, maintaining an older house can be quite a financial drain. This becomes even more apparent in situations where children are located far from home with little chance of returning to live in the family home.

» Income planning issues: There are two key issues at work here. They are:

No. 1 — Making sure there is enough income for retirement and, of critical importance, seeing this income can last as long as needed.

No. 2 — Securing, in the event of death, not only that expenses are paid for the deceased, but also that an income stream continues for the survivor. This provides financial “peace of mind” for a survivor not to experience too large of an income loss. And understand, if the survivor would live for 10-15 more years, that could require a great deal of income.

There are, obviously, many areas at work in providing for economic security. The overriding message at work here is this; Life offers NO GUARANTEES and the plans that we make for ourselves and our loved ones today are the key tools to securing financial “peace of mind”. Always remember — there is no better feeling in life than in knowing that plans are in place — for the days in front of you…

» Ike S. Trotter, CLU, ChFC, is a financial advisor in Greenville. Securities and investment advisory services provided through Woodbury Financial Services Inc., Member: FINRA, SIPC and Registered Investment Advisor, P.O. Box 64284, St. Paul, MN 55164. Tel: 800.800-2638. IKE TROTTER AGENCY, LLC, and Woodbury Financial Services are not affiliated entities. Information and opinions expressed are those of the author and not necessarily those of Woodbury Financial Services Inc.

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