“What we’ve got here is a failure to communicate.” – From the1967 film, “Cool Hand Luke” starring Paul Newman.
Question: I’m trying to organize my financial life and am worried that I’ll overlook something important. Help! I’m losing sleep. What suggestions can you make?
Answer: If something is keeping you up at night, it is definitely time to take action. The most common concerns people have are not running out of money and leaving a legacy or inheritance. To address these and other issues, begin with what’s on your mind by prioritizing fiscal needs, “wants” and goals.
An effective way to quiet the late night/early morning mind chatter is to place those worries and concerns on paper. Next, share those anxiety-provoking thoughts with another human being. Although my cocker spaniels Lucy and Freckles are great listeners, I don’t get much feedback or useful advice from them. My husband Pete and our team of professionals are better equipped to offer meaningful input to quiet my concerns. With simple — not to be confused with “easy” — foresight and planning, the top financial planning mistakes may be avoided. Don’t be afraid to ask for help.
If a stack of bills is bothering you, tackle that task first. If you’d like to pay for your children and/or grandchildren’s education, then that’s where you should start the planning process. Once the top concerns are addressed, it’s time to pull out a checklist and consider other less obvious issues. This helps to avoid overlooking significant and essential elements.
Communication is vital. Connect with yourself first to clarify goals and balance them with resources. The next step is to talk with those in your “circle of trust” who are financially connected with you. Many people prefer a structured and professional process for this phase and consult a financial planner to facilitate this phase. Success depends on communication with your team of professionals, family and those who rely on you or who will benefit from your legacy planning.
Regrets, I’ve Had A Few
According to research conducted by Harris Interactive, when asked if they could have done something differently and what matters they didn’t anticipate, a recent group of retires responded with these top four disappointments:
- 23 percent of those who started drawing Social Security early wish they could change the age that they started
- 27 percent of current retirees say their Social Security benefits are less than expected
- 32 percent say health problems keep them from living the retirement they expected
- 26 percent say health care expenses keep them from living the retirement lifestyle they expected
Retirement and estate planning can go hand-in-hand with a domino effect. In other words, developing a strategy for enough reliable income during retirement increases the likelihood that assets will be available to leave an inheritance and legacy. Therefore, it’s important to plan for the contingencies of retirement rather than just the best-case scenario.
Here are four common estate-planning mistakes when devising a long-term strategy:
- Failure to plan for the unknown: Health concerns, early retirement, disability or death, this means creating plans for long-term care, long-term housing and overall income needs.
- Failure to update beneficiaries: Often during the most dramatic events in life — marriage, childbirth divorce and death — we’re too wrapped up in the moment to consider how these new circumstances impact our previous plans. It’s important to regularly review and make necessary updates to named beneficiaries for bank accounts, investment accounts, retirement accounts and insurance policies. Remember that these account documents aren’t affected by any instructions stipulated in a will.
- Failure to communicate: This takes on greater meaning than the quote from “Cool Hand Luke.” Don’t just create your plan; communicate those plans with loved ones and anyone else that will be affected by them. It’s a kindness to be able to explain decisions and resolve conflicts before death, since many times estate issues can tear a family apart.
- Failure to plan for taxes: Utilizing a trust to transfer assets and real property can help avoid high taxes.
- Failure to seek professional advice: Estate planning is best done by professionals and for good reason. While remodeling professionals report that 30 percent of their work stems from repairs resulting from homeowner do-it-yourself (DIY) projects, DIY wills and other estate planning pitfalls frequently cannot be repaired after death. Estate planning documents found online from a legal software company may not comply with state laws, nor will they provide individualized advice.
It’s human nature to plan for the best-case scenario. Communicate with yourself, family and your team of professionals to take charge of you financial life. Although it may seem overwhelming or frightening, not doing so could rob you of peace of mind today and in the future. If you’d like a copy of our “What keeps you up at night?” checklist that outlines six categories and asks 30 common questions about financial matters, please contact our office. Stay focused and plan accordingly.
This information is general in nature and is not a recommendation of any particular investment. There is no guarantee any particular investment strategy will be successful. Opinions expressed herein are those of the author and subject to change at any time. Consult with the appropriate legal and tax professionals for advice on these matters.
“Certified Financial Planner Board of Standards Inc. owns the certification marks CFP(R), CERTIFIED FINANCIAL PLANNER(tm) and federally registered CFP (with flame design) in the U.S.”
This article provided by Darcie Guerin, CFP®, Associate Vice President, Investments & Branch Manager of Raymond James & Associates, Inc. Member New York Stock Exchange/SIPC 606 Bald Eagle Dr. Suite 401, Marco Island, FL 34145. She may be reached at 239-389-1041, email firstname.lastname@example.org Website: www.raymondjames.com/InvestmentInsights