“As planners, we want to be conservative, so we tell advisors to plan for clients to live to 100.” Katherine Roy of J.P. Morgan writes in Financial Advisor. Of course a host of variables affects the answer to the issue of how much a person or a couple needs for a comfortable retirement, Roy admits. Still, with estimates of a century for life expectancy, it’s a whole new planning ballgame.
From an estate planning viewpoint, it’s also a whole new ballgame, as we remind clients of Geyer Law. Once upon a time, people worried about passing away before they’d put their affairs in order and formalized their wishes. In today’s reality, parents must be sure to “secure their own estate planning ‘oxygen masks'” before considering gifts to the next generation.
Longevity planning encompasses a number of vitally important areas:
- lifetime gifting of assets
- housing
- long term care
- decision-making autonomy
- income needs (and the effects of inflationary pressures)
- taxes (individuals and couples with the bulk of their assets held in tax-deferred retirement plans will find their income significantly reduced through income taxes)
“So how should longer lifespans be addressed when setting up a trust?” is a question Amy Feldman poses in a Barron’s article titled “When Longevity Upends Trusts”. In fact, Feldman remarks, the impact of longevity on trusts and estates is only just beginning to be seen. With the longer timeframes for estate plans to “play out”, the impact of divorces and remarriages within the family even further complicate the issues. Alongside the intra-family considerations are ourside factors such as investment market uncertainties, changing legislation affecting retirement plans and estate taxation.
The core complication, though, concerns weighing how much the donors might need to support their own now longer – possibly much longer – lifestyles, while still giving as much outright while they’re alive, helping the next generation when needs manifest now.
At Rebecca W. Geyer & Associates, coping with all these planning factors dictates a “together is better” approach:
Advisors – All the advisors of a client – CPA, financial planner, insurance advisors, and estate planning professionals – need to work together to formulate and reformulate the plan as needed.
Family members – Multigenerational family conferences help acquaint the younger generation with the members of the advisory team and allow the clients to openly share with loved ones the values and assumptions – along with the issues – that have gone into creating the estate plan.
Retirement planning is turning 100 – use planning turns that into a positive!
– by Ronnie of the Rebecca W. Geyer & Associates blog team
