(Forbes) - More than half of those with at least $100,000 in investable assets and who have retired – or are planning to do so – do not yet have an estate plan, according to an April 2024 Ameriprise report.
At a time when we are advised to consider how to live our lives while reckoning with the reality that we could all die at any moment, It turns out that we are not undertaking the hard tasks of planning for longer lives or death.
Recent news about advance medical planning, retirement stability and estate planning show that few are prepared. Approximately two of every three adults do not have an advance directive, a plan in place for when they are incapacitated or need end-of-life decisionmaking.
Under a third of Americans have a will, according to a 2024 report from Caring.Com. Almost half (43%) explain that it’s because of “procrastination,” a percentage that is higher than those who explain it is because they do not have enough assets.
When it comes to retirement, under one-third of those in the Ameriprise report feel confident that they will have enough money to last the rest of their lives. Approximately one-quarter don’t agree on how much to spend for children and grandchildren.
It's not because couples don’t have shared goals for when they retire or because they do not trust their partner when it comes to money. The Ameriprise study showed that over 90% of couples do share goals, trust one another, and are open in discussing their finances. Most (68%) find that their approach to finances is balanced by their partner. Blended families, which include the children of another relationship, however, may face distinct challenges as they consider the respective needs of their prior and current families.
Of course, some people are unable to save or save less because of their income. For people who have been invested in a 401(k) plan for ten years or longer, women’s average balance was slightly less than 75% of men’s, Moreover, most people who are working class do not yet have a pension, according to Deborah Carr, a sociology professor and Director of the Center of Innovation in Social Science at Boston University.
There is plenty of guidance on how to plan and how to save. The most basic advice is to face these realities. Regardless of income, regardless of marital status, everyone needs to consider how they want to be taken care of when they can no longer care for themselves, how they will ensure as much comfort for themselves as possible during retirement, and what will happen to any assets upon their death. A first step is creating a realistic list of any assets and projected expenses, given that retirement could last for 30 years. Even the almost half of American households between the ages of 50-64 that have under $10,000 in retirement savings accounts can take steps to increase their retirement stability, such as delaying the receipt of Social Security.
A second step is conversations with family members and close friends, making sure that wishes for care are known and documented.
A third step is involving professionals, ranging from therapists who can help with confronting the unknown to the local Social Security office to lawyers and others.
Those with assets, according to the Ameriprise study, can use financial advisors, and study participants who had consulted financial advisors overwhelmingly believed that the financial advisors has been helpful.
Deborah Gordon, a law professor at Drexel University who has worked with many different types of clients and studies family wealth, suggests that a helpful and reassuring first step is to get educated about what happens if no planning occurs: “One of the things I’ve found to be true—both for clients and law students—is that people frequently misunderstand the default rules that kick in when we don’t do any planning for our property or care. Often, those whom we most trust or want to benefit are not the people whom the law selects, depending on where we live and how property is titled. While planning for incapacity and death can be overwhelming, it also can be empowering, especially with the right help.”
Taking control of long-term planning makes us better able to confront the drumbeat of headlines on what might happen if we don’t plan.
By Naomi Cahn - Senior Contributor
April 28, 2024
