It isn’t uncommon for people to regard their retirement accounts as large consistent assets. Understandably so, we devote our able-bodied years to conserving much of our earnings in preparation for our prospective futures. Sadly, the high expenditures associated with retirement such as the increasing cost of healthcare can easily undermine even the most prudent retirement plans. As a result of retirement accounts tending to be the largest of assets within a person’s estate, adequate planning becomes critical in the handling of retirement funds.

Estate Planning as you Enter Retirement

The initial aspect of your retirement planning is to ensure you will retain the assets needed to care for not only yourself but your family as well. As mentioned, the increasing costs of retirement such as healthcare make careful planning essential so you may manage all of your expenses on a fixed income after you retire. We likely all aspire for a quiet retirement but life happens and financial disruption can be unexpected and stressful. Moreover, in addition to creating a budgetary financial strategy designed to make your retirement comfortable, we can also work closely with your financial advisor to define an approach for the distribution of any unused funds upon your death.

Furthermore, the rules regarding the taxation of retirement funds can be complex to interpret and may further exacerbate an already stressful retirement hardship. After retiring, you will be required to receive a minimum distribution of funds which will be subject to relevant income tax. The majority of people are familiar with having income tax withheld from their paychecks but often fail to realize that they will still face comparable tax liabilities respecting their retirement accounts.

Passing on your Financial Assets

Equally important are the tax considerations needed in regards to passing on the assets of a retirement account. As discussed, due to accounts being created with pre-tax contributions, required minimum distributions are subject to income tax. After the retirement account owner’s death, if and when these funds are distributed to designated beneficiaries, there will still be income tax concerns to consider. It is for these reasons that it is strongly recommended that you work closely with a trusted financial advisor and estate planning attorney in order to best experience and enjoy your golden years. With experts like these in your corner, you may rest assured that you have taken the steps needed to care for your family both now and in the future.

Fundamentally, ensuring that both your retirement plan and estate plan align will grant you the greatest benefits. Working alongside your trusted financial advisor and an experienced estate planning attorney can prevent the established goals of your retirement and estate plan from contradicting each other.

For instance, you may have designated a beneficiary to your retirement account when you first set up your 401k but now desire to alter who or how a designated beneficiary may receive your assets after your death. Or perhaps you initially prepared to use excess funding taken from your retirement account to care for an aging loved one but due to unforeseen circumstances require supplementary funding sources to cover these expenses.

Again, substantiating the importance of periodic meetings with your financial advisor and estate planning attorney to ensure your family does not face financial hardship once you have passed.

Reputable Estate & Retirement Planning Experts

No question about it, it can be very difficult to understand everything you need to know when it comes to retirement. If the current state of your retirement account, estate plan, and the assets therein have you concerned, please contact the legal experts at Syntero Group today. Our firm is dedicated to your personal success and can assist you with your trust and estate planning needs. With so much on the line, it pays to be prepared – connect with the people who can help and make certain your final wishes are documented, respected, and implemented.