Good Morning Dinks. Most financial planners tell you that’s important to save for retirement, from a very young age we are taught to work hard now so that we can enjoy our money later. This is true, but what happens after retirement?
If you have ever had a retirement plan prepared by your financial planner you know that 90 years old is the norm used by the industry to determine our life expectancy. If you don’t live until 90 years old then you will have a surplus of income that will roll over into your estate. But what happens if you live until 90 or if you live longer than 90 years old? You will be broke, have no money to live and your will also have no money to fund your estate.
Estate planning is important too
Contrary to popular belief the need for our money doesn’t stop at death. Some people save on a regular basis for their estate’s financial needs, some people set aside a fixed amount of money to cover the costs of their estate expenses such as funeral costs, debts and final taxes, but some other people don’t worry about what happens after they are gone because they assume their family will cover the costs of their estate.
I actually had a client tell me that he doesn’t care what happens after he passes on because he won’t be here. I asked my client, but what about your family? Can they afford to pay for the costs of your funeral and other final expenses? The client confirmed that no one in his family had $10,000 to cover his debts and another $10,000 to pay for his final expenses, but he still didn’t care. The client continued to say that he wanted to spend all of his money while he was alive because what happens after he is gone is not his concern.
Of course as a financial planner I was floored by his attitude, but it’s not my job to change people’s personal beliefs. It’s my job to give them the information and express my concern for their choices, but at the end of the day clients will ultimately make their own decision.
You can never know when you will go
The fact that the client wanted to spend all of his money while he is alive is a ridiculous statement in itself. Of course I understand the idea behind what he is saying but unless he has a deal with a higher power there is no way that we can spend every single dollar before we go.
I believe in enjoying our money while we can, but I also believe in planning for the future. As a child I couldn’t imagine my parents leaving me with a financial burden of thousands of dollars after they have passed on. I would be very offended and at the same time I would feel obligated to take care of their final expenses and the cost of their estate.
How would you feel?
Imagine that you didn’t have the money to pay your parent’s final expenses. I would not want to get into debt to pay someone else’s debts, but I guess we would have to. This is why it’s important to stress the importance of both retirement planning and estate planning to the older generation.
Photo by joseandrosanne