When I was younger I never really thought about why it was important to save money. I was under the impression if I had it I could spend it. My parents and grandparents instilled within me to save as much as I can for emergencies. Now I understand why. It’s for my retirement and my future. With today’s economy, things can change for younger generations if they can get social security when they retire. It’s an unnerving thought. All the what-ifs come to mind and it’s good to keep in mind what one can control in the present time. This is a cumulation of what I learned while working in consumer finance. I hope to help relieve that anxious feeling about having enough when one retires or passes on. I am not an expert but know that these things are important to establish and consider. To learn more reach out to a lawyer and financial advisor or planner.
TLDR (Too long didn’t read) Short Version:
Teens to 20’s: Reach out to a financial advisor or planner, establish savings, retirement and investment accounts. Write a will. Set up a direct deposit for income into savings and retirement accounts.
30’s – 50’s: Update your will, designate POD and or POA on accounts, establish Estate and or trust accounts, reach out to companies with your assets to see how funds will be allocated when you pass on, set up direct deposit if you haven’t so already, and plan your funeral.
60’s and beyond: Consider downsizing and consolidating your assets and possessions. Update your will and make a video Will to share your stories on.
Things to establish in your teens and 20’s
Start a savings account for emergency funds. It’s ideal to keep six months or more of savings in a savings account that is connected to a checking account. This saved me a couple of times. Once when I had to replace my tires and another when my kitty Saber passed on. A savings account is great to have just in case.
Open an IRA Traditional or Roth for retirement– putting away as little as $25 towards this can help in the long run. There are other methods of savings as well. Depending on if your place of employment has a retirement plan or not this is another great venue or that extra play money once you do retire.
Start investing extra funds into projects, companies and/ or products that will give you residual income. What a great feeling to get a few years down the road to get dividend checks from inventing into properties or companies. One less thing to worry about.
Stash and Acorn are great apps to use to put a little away for play money or just in case funds.
Write a will written: Though at this point in your life you may not have all the things your hearts desire it’s important to make sure your possessions do get passed on to the next of kin. If you do have kids at this point definitely write a will. Never know what tomorrow will bring. Partner with a lawyer and financial advisor to see what your options are.
Reach out to a Financial Advisor and or Planner: Once you have established your emergency fund savings and a retirement fund reach out to a financial advisor or planner. They are a source of information on how to utilize your assets especially when you do obtain more assets then you can spend.
Things to establish and consider in your 30’s, 40’s, 50’s, and 60’s
These may not apply to everyone. You could be retired by now depending on your circumstances. That’s pretty awesome!
Review your Will and update it. Circumstances may have changed and there are more things to add or delete from the will. Ideally, review and update the will every ten years or when a new event happens. Grandchildren, marriages, divorces, deaths in the family, etc. Ensure that in your will to establish an executor of the will. They will be the ones to help distribute your possessions and funds.
Add a POD and POA to your accounts: under medical circumstances, you are unable to do your own financing, it’s important to have a designated family member or friend be your Power of Attorney (POA). Paperwork for a POA is done with a lawyer and forms can be found online or at a local library. That way they can do your finances while in the hospital. There have been many sad stories I have heard where a family member couldn’t pay their bills because they didn’t have anyone to help them while they were in the hospital. It’s a great idea to always have someone help out. Same goes with Payable upon Death (POD)- by designating a family member or friend as a payable upon death they will have access to the fund once you pass to help pay for outstanding expenses etc. Again this may vary from bank to bank. POD can be set up very easily with the person’s social security number, address and birthday. Consider reaching out to your local bank to establish either a POA and POD on your accounts. As for being a co-owner on account- yes the funds go to that co-owner however, it is important to keep the name of the deceased relative or friend on the account for about a year or so. There may be retirement, pension checks and stipend checks that may come in the future if not handled ahead of time. Some banks, if the name of the deceased is not on the account, the bank may not negotiate the check and therefore the family could lose out on the funds. This has happened on multiple occasions to several of my family friends and clients. With no proof the deceased client had an account with a bank, many checks could be cashed or deposited because of the titling of the account.
Establish a Trust and or Estate Accounts: These accounts will need court documentation and a lawyer can advise on more. Setting up these types of accounts ensures the funds are left to the family. There was one client I had that had checks made out to the Estate of his mom but couldn’t deposit into his account even though the funds were rightfully his. He had to establish an estate account for the fund to be used. Again this policy may vary from bank to bank but if the check payable to doesn’t match the titling on the account, the check may not be negotiated.
Reach out: Reaching out to those companies, investments or otherwise is always a great idea. Know what and how the funds could be distributed after your passing. Set up a direct deposit if possible that way the funds go right into your account.
**Tip: Keep in mind authorized users is not the same as co-owner or co-applicant. For Example on a credit card, co-owners have the rights to know all the information about the credit card and can redeem the points or miles it accumulated. While as authorized users doesn’t and can only use the card. For instance, I had a client that was an authorized user on her husband’s credit card and when he passed she lost the air miles they had saved up. There was no way to retrieve them and she had to open a new credit card account in her name. She added her son later as the co-owner that way she could pass on those air miles.
Plan your own funeral arrangements: This is a sort of morbid concept to think about. When I was born, my grandfather picked out how and where he wanted to lay to rest. He designated a few close family friends to help with funeral arrangements so that the close immediate family could grieve. When the time came and he passed on, my mom, aunts, and uncle didn’t have much to do but just be there for each other and my grandma. Because he did have a will and other documents, they knew exactly what kinds of flowers he wanted, what he wanted to be dressed in, etc. He got down to the details. Basically plan the details, the what’s, who’s, how and where. What type of funeral, casket, food to be served, flowers, etc. Who will help with arranging that all of it? Where do you want your cremated remain to be kept, buried or otherwise? Where you want the reception to be? Be as detailed as you want and update this information. Keep it with your will and other important documents. I found that One Note, Google Docs and Evernote are great digital ways to organize thoughts, ideas, and lists. Always keep a handy copy.
Things to consider in your 60’s, 70’s, 80’s and beyond
Consolidate your assets: Maybe at this point, you have several bank accounts and investment accounts. It can get overwhelming to manage. If you don’t have a financial advisor or planner, consider consolidating your assets to maybe one to three banks to keep things a bit more manageable. For instance: A bank where you have your expenses and pay your bills out of, a bank for just play money and another for savings, investments, etc. Again establishing POD’s and or POA on the accounts. This helps your family to that way when you do pass they don’t have to reach out to so many banks or investment companies to receive the funds you left them.
**Tip: If you have a safe deposit box be sure you have another person as a co-owner on it. That way they can have access to it when you pass. Safe deposit boxes hold hidden treasures, important documents, jewelry, and prized possessions. There have been countless occasions where family members of clients couldn’t access the client’s items because they were not co-owner on the safe deposit box and the items were sent out or taken by the state.
Donate, give away or sell off items you don’t use: Over the years there can be a lot of items and possessions to go through. It’s a good idea to go through those items and figure out what means the most to you. Ideally every year one should go through their items but life can get crazy. It’s easy to cumulate things one needs or doesn’t need but it’s good to keep in mind that if you do have a lot of items to think about what you are leaving for your family to go through. My great-grandma started selecting items to be passed on to family members by simply putting a tag with our names on it. Though she had a will for more of her prized possessions, for her trinkets she put names on them to be distributed once she passed on.
Make a video Will: This can be personalized for only one person or several but it’s a fun idea to leave behind for family members and friends. That way 1) they can see you live and kicking one more time and 2) you can tell stories to pass on to your future generations.
Enjoy life to the fullest! I know that we can’t all live forever. And everything is temporary. Some of us can live on through stories, art, and books. With what I learned I know I want to leave a legacy future generations can look back on and learn from. Planning for the future doesn’t have to be so bad or morbid to think about. The will to act now in the present to leave a legacy for your family and friends is the best thing one can do for you and their future.
Again reach out for more information to a lawyer or financial advisor for more details on the items listed above. In the meantime, I hope this helped plant a seed of planning and preparing for the future!
Keep Kicking and Smiling! -TJ Banski