June 2014: Back to the Basics

In Back to the Basics, Estate Planning, Income Planning, Investment Management, June 2014, Long Term Care by Adam Cufr

It has been brought to our attention that a return to the basics of financial and retirement planning would be helpful. Back to the Basics is a study of the fundamentals.

What are the building blocks of a resilient retirement plan?

Often, we are tempted to get lost in the nuance of various parts of a retirement plan that we forget to take inventory of the basic building blocks. Let this high-level checklist guide you in considering whether you have the right pieces in place.

  1. Income Sources – Without a regular paycheck, these could include a company pension, Social Security, income annuities, investment dividends, real estate income, and more. Making sure these income sources are optimized and tax-efficient are the basis for creating a lifetime of income.
  2. Health Insurance – The best income and investment planning may not sustain the ongoing cost of a major health crisis. Having health insurance through an employer, owned individually, or through Medicare are essential to retirement success.
  3. Risk-Based Investments – With income sources in-place and health insurance covered, an appropriate risk-based investment plan for your “surplus” money may allow for things like: family emergencies, long-term inflation protection, and fun. Having your investments aligned with your objectives ensures those “extras” don’t threaten your basic living expenses.
  4. Long Term Care Protection – The only spending category to increase for the average retiree, long-term medical care that is not covered by Medicare can wreak havoc on a retiree’s best-laid plans. With the financial pain typically felt by the surviving widow, an extended long-term care need may be wise to factor into your planning. For many retirees, this involves some form of insurance, but for others, simply earmarking assets for the possibility of a care need may be enough.
  5. Estate Planning – Knowing that the assets you’ve worked your entire life for will be directed to match your wishes can bring incredible comfort. Developing an estate plan that may include wills, trusts, or other legal planning can seem daunting but once completed, will ensure that your family will be blessed by your bequest and not burdened by it. After all, a family divided over money and stuff is a tragedy and can be avoided with thoughtful planning.
  6. Insurance Protection – With all of the above building blocks in-place, insuring against an unforeseen car accident, fire, or legal attack is mandatory. If you do not have an umbrella policy to protect your possessions and your exposure to legal liability, you may be taking unnecessary risk. For very little cost, an umbrella policy can provide tremendous peace of mind to the successful Steward.

Once the building blocks are in-place, you can fine-tune in order to maximize the value of your collective resources, including tax strategy and optimization. If you are not comfortable and confident with any of the items above, please contact us to help you evaluate your options. The various pieces don’t need to be terribly complicated, but missing even one can unnecessarily cause problems. Don’t wait another day.