What’s Your Plan?

A local accountant, a financial advisor and an estate attorney share their advice on planning for your future. In a nutshell: The time is now. By Kristen Lee Smith

 

Frank A. Slotin, CPA 

Managing Partner at KRT, CPAs 

 

What is the optimal age to start planning for retirement? 

As soon as you can, optimally with the first paycheck received. The sooner you start saving for retirement, the more time your money has to grow. As Warren Buffett said, “My wealth has come from a combination of living in America, some lucky genes and compound interest.” 

What are your top tips for working toward this goal? 

The internet is full of information, retirement calculators and planning tools for retirement. Every major bank and brokerage firm, including Fidelity and Vanguard, and sites like Consumer Reports, BankRate and AARP has plenty of free retirement information.

The long-term benefits of saving money for retirement are simple: In good health or bad, it’s just expensive to get old. When the day comes that your earned income stops, you are going to have to depend on your retirement savings and Social Security which, in most cases, are both taxable income.   

What are the most common mistakes that you see?

Not putting away enough money, not taking full advantage of a company retirement plan matching and taking money out of your retirement plan prematurely, whether it’s to reduce debt because you’ve lived beyond your means or to make a major purchase. When you make a withdrawal, which will be taxed at ordinary income tax rates plus a penalty, those savings and the compounding of those savings are gone forever.    

 

Andrew J. Murphy 

Partner and Senior Investment Advisor at GenCapital 

 

What is the optimal age to start planning for retirement? 

I truly believe that it should start as early as possible and be part of a more comprehensive financial planning process. Our team has quite a few young professional clients, and we typically encourage these folks to start thinking specifically about maximizing retirement savings at the start of their careers. Saving money in a qualified retirement vehicle such as an employer-provided 401(k) plan is only one part of the retirement planning process, but it’s a vital one given the value of the money invested and long-term, compounded returns invested in a tax deferred vehicle.

How do you advise your clients? 

Initially, we start our young clients with an Investment 101 primer if they are new to investing or financial markets. We spend a lot of time with our clients going through career, financial and personal goals and objectives. Our planning is only as good as the information we uncover in a Socratic exercise with our clients, and this process should be repeated every one to two years to continually add key, new variables, and remove obsolete variables so that the retirement/financial plan reflects ‘real life’ and the long-term objectives of our clients. 

When developing a retirement plan, we want to create a reasonable, achievable plan that is flexible yet complementary to our clients’ lifestyles and charts a course for achieving their goals pragmatically. Ironically, many times a good plan can be a safety net against the unexpected—the things we did not originally take into account. 

What are the most common mistakes you see? 

Simply not having a plan, not having a plan that is not reasonable or understandable, or having a plan that is not flexible enough to accommodate life’s changes. 

  

Gennie Long 

Estate Attorney at Bart, Meyer & Company, LLC

 

What’s the difference between estate planning and retirement planning? 

Estate planning generally focuses on how an individual prefers to distribute their assets after death, while retirement planning focuses on the financial goals for when an individual retires.

What is the optimal age to create an estate plan? 

Right now. We see most young couples prepare an estate plan when they get married or after the birth of their first child. Other clients come in after major life changes: starting or purchasing a business, divorce, remarriage, inheritance, retirement and changes in health issues. All of these life events—plus changes in the law—can impact an estate plan, so it’s helpful to review your estate plan every few years. An important thing to remember is that estate planning involves getting to know a family. So the earlier you begin the process, the more efficient it will become over time and the better the product. 

What are your top tips when beginning to create an estate plan? 

It’s helpful for our clients to have a general understanding of all of their assets and how they are titled. It is also useful for our clients to consider who they think would be the best person or persons to serve as a guardian of their children, trustee of a trust, executor of their will, and agent for health care decisions.

What makes a “good” estate plan? 

While the intent is to ensure that our clients’ wishes are carried out and to give them peace of mind, a good estate plan also has the potential to save our clients time and money, particularly tax savings. In addition, clarity in an estate plan is key. On that note, well-drafted estate planning documents are paramount, but many assets pass in different ways, so a good relationship with the attorney is vital. The worst estate plan is to not make an estate plan.

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