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Six Estate Planning Tips for a Happy Retirement

Retirement is an exciting milestone—you finally get to enjoy the hard-earned fruits of your labor. As you plan for your senior years, don’t neglect the responsibility of estate planning. A thorough estate plan will ensure that your assets are protected, your loved ones are provided for, and your wishes are upheld.

Continue reading to learn more about how estate planning can help you enjoy a worry-free retirement. 

Estate Planning for Seniors: Six Steps to Take Before You Retire

1: Update Your Estate Plan

Just because you already have an estate plan doesn’t mean it will be successful when the time comes—especially if you haven’t touched it since first entering the workforce. After you establish an estate plan, it’s crucial that you update it every few years. Not only do your circumstances change over time, so do federal and state laws. 

Reviewing your estate plan gives you the chance to correct errors and make changes, like adding new beneficiaries. It also allows you to create important documents, such as trusts and advance directives, that you didn’t have before. And it gives you peace of mind knowing that your assets are protected and your beneficiaries are accounted for. 

2: Purchase Life Insurance

Life insurance isn’t just for families with young children—it is also an important asset later in life. You can use life insurance to pay for funeral expenses or estate taxes, providing a financial security blanket for your surviving relatives. The proceeds can also give your beneficiaries tax-fee income to help offset any tax obligations that come with their inheritance. 

3: Maximize Your Retirement Account Contributions

Retirement accounts like 401(k)s and IRAs can help ensure your financial security, and enable you to leave a larger inheritance. Maximizing your contributions can also reduce your taxable income. 

As of 2023, people under 50 years of age can contribute a maximum of $6,500 per year to their traditional or Roth IRA accounts. Or they can contribute up to $22,500 to their 401(k). For seniors over 50, the maximum contribution to a traditional or Roth IRA is $7,500. 

4: Consider Gifting 

If you want to provide financial support for your loved ones, you don’t have to rely on leaving a hefty inheritance. You can start giving your assets—including money—to loved ones now, to help reduce the amount of estate taxes down the road. As of 2023, you can gift up to $17,000 dollars ( $34,000 for married couples) to an individual tax-free each year. So you can gift your children $17,000 each, all in the same year without imposing the gift tax.

5: Plan for Possible Disabilities

One of the most crucial aspects of estate planning is to plan for the unexpected. Unfortunately, health can decline rapidly with age, and it’s important to be prepared. You should consider drafting an advance directive to help protect you if you ever become incapacitated. 

Types of advance directives include:

  • Medical Power of Attorney (POA)

Naming someone as your medical POA gives them the authority to make important healthcare decisions on your behalf. 

  • Living Wills

A living will explicitly states your wishes regarding certain treatments, life support, etc. This document can guide your medical POA on how to make decisions that accurately reflect your healthcare wishes. 

6: Set Up a Living Trust

A revocable or “living trust” is a versatile tool that allows you to protect your assets during your lifetime and transfer them smoothly to your beneficiaries after you’re gone. You can add or remove assets at any point during your lifetime, but a living trust cannot be changed after your passing. A living trust also avoids probate, saving your loved ones the burden of a long and expensive court process. 

Are You Planning Your Retirement?

If you’re getting ready to retire, you need to update your estate plan. The Phelps LaClair team can make sure all of your documents are legally valid and that your estate plan securely covers all of your needs. 

We have over 40 years of experience helping Arizonans manage their estate plans through every milestone in life. Give us a call at 480-892-2488 today to schedule your free consultation. 


Images used under creative commons license – commercial use (8/25/2023). Photo by Pavel Danilyuk on Pexels

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