There are a number of reasons why it is risky to procrastinate in making getting one’s finances and estate in order until old age. In our last post, we mentioned some of those reasons.
This post will follow up by suggesting several basic ways one can keep an eye on one’s financial well-being along the way, so as to avoid waiting until it is too late to make wise decisions.
The first suggestion is to prepare an adequate estate plan, including a will, a durable power of attorney, and an advanced health care directive. Those over 65 years of age should also look consider working with a financial adviser to work with long-term financial goals.
A second suggestion is to establish a revocable living trust as part of one’s estate plan. While there can be more expense involved in such trusts, they do bring their advantages. An advantage of a living trust is that it prevents courts from controlling your assets in the event you become incapacitated, and by and large prevents you from making poor financial decisions in old age, since the trustee will be there to manage the assets in the event you become incapacitated. Revocable living trusts also reduce the chances of financial exploitation by family members.
The final suggestion is to regularly update to your financial plan. Working with an adviser and meeting up with them on a regular basis will be of immense value in taking one’s financial life in the direction necessary to meet your financial goals. Meeting with your advisor every two years, at least, is a good practice. During those meetings, the two of you can review your investment portfolio, update your trustee list, make sure your beneficiary designations are what they should be, and update anything else needing updating. Another suggestion is that it can be helpful to work with the same financial planner consistently over the years. Selecting an adviser based on their age may be helpful to this end.
Source: CNBC, “Aging issues can put retirees’ money at risk,” Dave Carpenter, 7 July 2011.