That popular Latin phrase – which translates to “Seize the Day” – has come to be a motto which encourages people to live in the now, to grab opportunities whenever they can. That could mean something simple, such as ordering dessert, or a big step like finally taking that cruise you keep putting off.
While it may sound exciting, that philosophy naturally impacts your finances. Some people who are not shrewd money managers should not make impulse purchases. One in three Americans have less than five thousand dollars saved for retirement, and according to a Nataxis Investor Survey, nearly half of all Baby Boomers have done no estate planning, even though more than two thirds of their children say they expect some form of inheritance.
For some of those people, splurging today can mean suffering tomorrow.
On the other end of the spectrum, many seniors aggressively safeguard their assets with the joint goals of saving for retirement and leaving something behind for their children. However, a compelling desire to set money aside for the future may come at the expense of a comfortable life.
It is a sensitive balancing act: How do you promote a secure financial future for you and your inheritors, while simultaneously enjoying the current lifestyle you worked so hard to achieve?
Plan for the Worst and Hope for the Best
Long-term financial planning is tricky by the very nature of what it represents, because no one can safely predict the future. Guesswork is inevitable, and the challenge is highly personalized.
For instance, one of the most damaging mistakes people make when planning for the future is underestimating how long they may live. Having a long and happy life is a great goal, but when someone’s longevity outlasts their assets, it is a real problem, especially when their later years plans include not being a burden on dependent loved ones.
According to the Social Security Administration, American men who reach the age of 65 now have an average life expectancy of age 84. For women, that number is 86.5 years. Approximately one out of every three of those 65 year olds today will reach age 90, and about one in seven can expect to reach age 95. Thanks to modern health care, it has been estimated that millions of older adults will spend one-third of their lives in retirement.
Unfortunately, it is all too common to see retiring Americans fail to calculate how much they need to live comfortably, both for now and the future. To safely optimize long-term financial security for yourself and your beneficiaries, it is recommended to construct a plan that anticipates you living to be at least age 90.
In addition, seniors should consider the possibility of needing assisted care in their later years. According to the Centers for Disease Control and Prevention, over 1.3 million Americans now live in some type of a nursing home, and the senior population of the U.S. is predicted to double in upcoming years.
A long life is a rare gift, but when people outlive their depleted assets, somebody else has to pick up the bill for their later years. It also means there will not be anything left for them to pass along to children or grandchildren.
Develop a Creative Strategy to Achieve Both
Successful financial planning can make all the difference for you and your loved ones in your later years. There are many effective options which will help you support the kind of personal lifestyle you want and deserve now, while also protecting your valued assets and providing some financial security for the next generations.
For example, certain types of trusts can be set up to pay you scheduled dividends while you are still living, but then the principal amount transfers tax-free to your beneficiaries upon your passing. There are many other kinds of programs such as life insurance, long-term care insurance, annuities, and a long list of other estate planning strategies.
However, be aware there is no one-size-fits-all answer. Each estate plan must address an individual’s or couple’s unique goals and wishes. It also helps to realize that plans can (and frequently do) change once they have been established, and your long-term financial strategy may require living within a budget.
Seek the advice of an experienced attorney
The knowledgeable elder law attorneys at Cordell Planning Partners specialize in affordable smart solutions for wills, trusts, Power of Attorney documents, and other essential aspects of estate plans, including creative long-term provisions.
Cordell Planning Partners also offers free educational workshops where we explain a range of estate plan options and asset protection programs, all in terms that are easy to understand.
To learn more, contact us today. You can even schedule a complimentary estate plan analysis to discuss your individual planning priorities.