You can use several legal tools to maintain control over your affairs in later years. These will enable you to decide, while healthy and alert, what you want done in the event of death or disability. Be sure to discuss any arrangements with your survivors to save them from facing difficult decisions and to give them peace of mind, knowing they are complying with your wishes.
Wills -- If you do not have a current will, the state, not you, will decide how your assets are divided. Such legal documents as Living or Revocable Trusts offer ways to avoid probate.
Trusts -- This device lets you decide who would be responsible for your financial affairs if you became unable to manage them yourself.
- Powers of Attorney and Living Wills -- Powers of attorney typically assign responsibility for financial matters to another person. Some apply to health care decisions as well. You can use a Power of Attorney or a Living Will to state in advance your wishes in case of an incapacitating or life-threatening illness. Doing so is essential if you want your family to know the circumstances in which you wish to decline life-support measures.
RELOCATING OR STAYING PUT
Where to live after retirement is a major decision. Perhaps you plan to relocate to a more favorable climate or to be near family. Research the consequences of such a move in terms of the basic cost of living, access to health care, and state and federal tax obligations.
If you are considering the advantages and disadvantages of selling your home, whether or not you plan to relocate, these are some relevant questions to ask:
- Can we afford monthly payments for mortgage, taxes, utilities, and maintenance?
- Will one or both of us be able and willing to take care of the house?
- Is the house a suitable place to live as we grow older and less agile?
- Will we need to draw on our home equity as a source of income or credit, or would we have more options if we sold the home and invested the proceeds?
In addition to owning a home or renting an apartment, a number of other housing options may be available in your community, many of which offer savings on housing expenses. These are some alternatives to consider:
House-sharing for help with chores or added retirement income;
Group living in a private home or one sponsored by a social services agency;
- Accessory apartments, or mobile or manufactured homes, including ECHO (Elder Cottage Housing Opportunity) housing which, if zoning laws permit, can be installed on the property of an adult child or other relative;
- Condominiums or cooperatives which have the advantages of home ownership without the burden of maintenance;
- Retirement communities which may offer companionship, recreation, and sometimes medical and housekeeping services.
An important part of financial planning is anticipating how to handle bad times. Prudent planning includes learning about public and private benefits programs. In most communities, governmental and private agencies offer services to help care for older persons, such as low-cost medical clinics, home health care, housing options, adult day care, and chore services.
The local Social Security Administration office has information about entitlement programs such as Medicaid, disability insurance, food stamps, and Supplemental Security Income. Ask about your state's Medicaid "divestment" rules which permit transfers of some assets to other people if done a specified length of time before applying for Medicaid (usually at least three years). Divestment is a precaution some take to avoid "spousal impoverishment" when all the family's assets are spent before a sick family member can be eligible for Medicaid assistance.
When arranging family matters, it will ease your survivors' emotional burden if you let them know your preference for funeral or memorial arrangements. You can handle these matters yourself by planning through a non-profit cooperative memorial society or by prepaying at the funeral home of your choice. If you decide to pre-pay, be sure you or your survivors can cancel the contract should you move or change your mind. Planning ahead and using comparative shopping skills can save thousands of dollars in funeral expenses.
PLANNING TO STAY INDEPENDENT
It's never too early to start retirement planning, and never too late to make adjustments in your financial situation. Whether wealthy or not and it's probably more important for those who are not to investigate your options and making practical choices now can allow you to stay in charge and meet your future financial goals.