• Estate Planning

Many retirees today worry about having enough money for their retirement. A major concern is assuring there will be enough money for the surviving spouse. This is called ‘shortfall risk,’ and it is a valid concern. People are living longer and health care costs continue to rise, especially long-term care which many seniors will need. In addition, the recent recession has given us setbacks in investments and record low interest rates. When combined, these issues can have a serious effect on retirement savings and projected income. But there are some things you can do now to help manage your shortfall risk and protect your assets.

The Key Takeaways

• The fear of running out of money in retirement is a valid issue due to increased longevity, increasing health care costs, low interest rates and the recent recession.
• Using experienced advisors who specialize in certain areas can help you increase your retirement income as well as preserve, grow and protect your assets.

The Role of Specialists
A retirement specialist can help you determine the best strategy for taking distributions from an IRA, 401(k) and other retirement accounts; the tax implications involved; how to continue to grow your savings; when to start taking Social Security benefits; and how to plan for out-of-pocket medical and long-term care costs. An estate planning attorney can help you shield your family and your assets from probate court interference at incapacity and death, unintended heirs, unnecessary taxes and lawsuits. Other specialists can be brought in as needed. For example, life insurance may be used to provide an inheritance for a child who does not work in the family business.

What You Need to Know
The financial advisor who helped you grow your retirement nest egg may not be the best choice to help you determine how to take your money out. Likewise, your business attorney is probably not the best choice to do your estate plan. An innocent error by a well-meaning but inexperienced advisor can result in a costly and often irreversible mistake.

Actions to Consider
Be open to new products and strategies you have not considered in the past. For example:

• Consider trusts combined with investments and property to manage the conflicting demands of income, spending, taxes, distributions and transfers.
• Delay taking Social Security benefits. If you delay benefits until age 70 and live past age 79, your lifetime income will be more than if you start taking benefits at Full Retirement Age (66-67).
• Utilize a revocable living trust to avoid court interference at both incapacity and death, a reason more people prefer a living trust over a will.

Also, new avenues of long-term care options are offered by insurance companies which include:

• Asset-based long-term care (a single deposit premium; if not needed for long-term care, the benefit amount is paid tax-free to your beneficiary);
• Life insurance accelerated death benefits (allows you, while living to access the death benefits to pay for long-term care expenses);
• Home health care doublers (a guaranteed life-time income contract that doubles your income up to five years if you need long-term care).