We often think of retirement accounts as monolithic resources. It is easy to see why. We spend years socking away money for the future. Unfortunately, however, the rising cost of healthcare threatens to deplete even the largest retirement account. Because retirement funds make up the largest assets in a person’s estate, proper planning is crucial to a retirement fund.
Evaluate Assets
First, ensure you control the assets necessary to take care of yourself and your family. With increased healthcare costs, you must consider your needs after retirement relative to medical expenses and a fixed income. While we all hope for a quiet retirement, financial difficulties lead unexpected stress. In addition to budgeting a financial strategy for your comfort during retirement, work with your financial advisor to develop a strategy for distributing leftover funds after your death.
Death & Taxes
In addition, you may struggle to understand the rules surrounding taxation of retirement accounts. Don’t we all? This could further complicate a potentially stressful retirement experience. Upon retiring, you will take a required minimum distribution, which is subject to income tax. Most people feel comfortable with income tax withholdings taken from paychecks. However, many overlook that the real possibility they will incur similar tax liability in retirement.
It is also important that your strategy for passing on the account takes tax consequences into consideration. As mentioned above, financial experts create these accounts with pre-tax contributions. So, the required minimum distributions made to the owner are subject to income tax. When these funds are distributed to a designated beneficiary after the owner’s death, there are still income tax concerns regardless of who is named as the designated beneficiary. It’s why working with a trusted financial advisor and attorney is so important to enjoying your golden years. With these experts on your side, you’ll rest easy knowing you’ve taken care of your family in the present and future.
401K Matters
Ultimately, you will benefit most from ensuring your retirement plan and estate plan align. Working with your trusted financial advisor and our firm, will ensure your retirement goals do not contradict one another. For example, if you designated one beneficiary for your account when you signed up for your 401k, you may wish to change who should receive your assets when you die. Or, you may have originally anticipated the excess funds from your retirement account being used to care for an aging loved one, but due to the market, you may need to find additional sources to cover these anticipated expenses. Meeting with your financial advisor and us is crucial to making sure your family and loved ones are not stuck in financial hardship after you have passed.
When it comes to retirement, it can be difficult to know what you do notknow. If you are concerned about the state of your retirement account, assets and estate plan, schedule a meeting with your financial advisor and our office today. With so much on the line, it pays to do your homework, connect with professionals and ensure your final wishes are documented and respected.
About Skvarna Law Firm in Upland and Glendora, California 
A skilled attorney can assist with your estate plan. Contact us today to learn about your options (909) 608-7671. We operate offices in Glendora and Upland, California. We provide legal services for individuals living in San Bernardino, Los Angeles, Orange and Riverside Counties. This includes the cities of Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Montclair, Pomona, La Verne, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
