Planning for your golden years in Las Cruces is no small feat. A holistic view of your retirement needs is a map of your journey to comfort and security as you age. However, the road to a stress-free retirement is littered with potential mistakes. Identifying common retirement planning mistakes to avoid can save future retirees from headaches and financial instability.
Based on the Smartasset article, “The Worst Retirement Mistakes to Avoid at All Costs,” we’ll examine the elements of a holistic plan, five retirement mistakes, and how estate planning can help you avoid them.
What is Included in a Holistic Retirement Plan in Las Cruces?
A holistic plan captures a robust overview of what your retirement will look like. Consider how much income you’ll need based on where you want to live, anticipated healthcare costs, if you’ll need Medicaid, where social security fits, and any supplemental income from investments. Estate planning strategies can protect assets, preserve and minimize taxes to help grow wealth so you have more of a nest egg in retirement.
Avoid These Five Retirement Mistakes
No Retirement or Estate Plan
The biggest mistake is not having a plan. Without one, you might not have savings, supplemental income, or retirement accounts to sustain you through retirement and beyond.
A solid Las Cruces retirement plan provides savings such as traditional bank accounts, pre-tax 401-Ks, an individual retirement account (IRA), or a Roth IRA. Accumulating savings also means having a plan to contribute consistently. An estate plan complements savings and retirement account wealth building. Read our article, Estate Planning is for Younger Generations Too, to learn about starting an estate plan earlier.
Excluding Your Retirement LifeStyle: Housing and Healthcare
Think about where you’ll want to live. Do you picture a senior living community in New Mexico or assisted living? Anticipate desired living arrangements and plan accordingly. Relying on social security might mean having a tight budget or insufficient income. It’s easy to overlook long-term care and other health expenses, especially if you’re healthy. However, healthcare expenses can deplete your retirement savings faster than anticipated. As you age, healthcare becomes an integral part of expenses. Consider potential needs like long-term care, which Medicare does not usually cover.
Letting How You’ll Save Slip Through the Cracks
Your investment strategy plays a pivotal role in your financial security. Consider your options to save money and build enough wealth for a comfortable senior lifestyle. A portfolio of interest-earning, tax-deferred, and higher-return assets is more likely to give you a robust nest egg. One of the typical retirement mistakes is maintaining an inappropriate investment risk level. However, being overly cautious can also impede the growth of your retirement savings.
Have You Neglected Tax Planning?
Tax planning is often overlooked in Las Cruces retirement planning, leading to unexpected tax burdens on your retirement income. Without proper planning, everything from Social Security benefits to withdrawals from your retirement account could be taxed, significantly shrinking your usable income.
What About Incapacity and Advance Care Directives?
Incapacity and advance directives are finding a place in retirement and estate plans. As significant portions of the US population age, they protect assets and preserve a sense of control over medical decisions if they become incapacitated.
Estate Planning Tools For a Holistic Retirement Plan
Las Cruces estate and retirement planning go hand-in-hand. Tools such as trusts and powers of attorney (POAs) protect assets, one’s wishes and interests, and empower trusted agents to oversee important matters when needed.
Different trust types protect assets through trustee administration and distribution. An irrevocable trust with the proper terms and conditions shields assets from taxes and creditors and is often used in Medicaid planning.
Powers of attorney (POAs) protect assets, an individual’s well-being, medical care, and financial matters during incapacitation. A medical POA or health proxy, authorizes an agent to oversee your healthcare and medical decisions according to your wishes. A financial POA allows the person you appoint to handle financial affairs and pay bills, access bank accounts, and trade stocks if specified in the legal document.
Key Takeaways:
- Have a Plan: Know your income needs, anticipate healthcare expenses, and plan for incapacitation.
- Plan for Health Care Costs: Factor in expenses like long-term care and unexpected medical bills.
- Consider How You Will Save: Know the options and find estate planning tools to protect and preserve your assets.
- Plan Your Estate During Retirement: Protect your assets and interests, build wealth, and develop an advanced care strategy through estate planning.
Conclusion
Incorporating these Las Cruces retirement planning strategies can help you avoid the pitfalls as you plan for retirement and anticipate a comfortable and secure life journey. If you’re wondering how to integrate estate planning strategies like trusts into your retirement plan, request a discovery call with E-Law. Estate Planning Attorney Michele Ungvarsky can provide personalized advice tailored to your unique situation and objectives.
Reference: Smartasset (Feb 27, 2024) “The Worst Retirement Mistakes to Avoid at All Costs,” Read the article.
