What People Misunderstand About Retirement and Final Planning

By Deborah Jeanne Sergeant

What you don’t know can hurt you — or at least hurt your wallet. 

While it is easier to think you will forever stay as active and vibrant as you are now, that is not reality. Making plans now can help you make this part of your life more financially stable and easier than if you delay.

People think they have a lot of time to save for retirement.

“Most people wait too late before they start planning for retirement,” said Diane Apostolova, investment consultant for Rochester Investments. “The earlier you start planning, the better so you have time to build your plan for years to come. Not doing that may leave you destitute in retirement at a time when going back to work may not be an option.”

If you are 55 or older, it may be later than ideal timing. Meeting with a financial adviser or investment expert can help you improve your finances for retirement.

People think they have plenty of money—when they don’t.

It may feel like you are ready to retire if your investment incomes yield enough to pay for today’s expenses, but Apostolova warned that is a mistake.

“Many people assume that if they can retire on a certain income today, that would be the income they’ll need in the future,” she said.

This line of thought does not account for inflation.

“The retirees in the future don’t want to miscalculate how much money they’d really need to live on,” Apostolova said. “Accounting for inflation and taxes in retirement is extremely important.”

Also think about the rising healthcare costs as one ages and—if aging in place—climbing expenses as the home requires accessibility accommodations and big-ticket repairs. (Homes grow older, too.)

People don’t get their plans in writing.

Most people will not simply pass away in their sleep. Typically, we check out of the world after a series of bouts with ill health. Some of these illnesses may inhibit the ability to make decisions. Simply telling your family in advance that you do not want artificial resuscitation or that you want life support is not enough. You need to have the documents written up and included in your medical records with your health system as well.

Cara Rusinko, owner of Constance Care Management in Rochester and her business partner, Bridget Jarvas, encourage clients to complete their advanced directives: a power of attorney and a healthcare proxy designation and medical orders for life-sustaining treatment.

“Many couples are each other’s POA and proxy, but they do not have a secondary,” Rusinko said. “Having those documents in place before a crisis happens is very important.”

If a couple experiences a serious car accident, who will speak for them then and handle their bill paying while they recover?

“People are reluctant to do these forms as it’s a taboo topic,” Jarvas added. “People wait too long to have those things put in place.”

People let forms get outdated.

Some couples have their proverbial ducks in a row with their will, power of attorney (POA), medical orders for life-sustaining treatment (MOLST) and proxy, but file the paperwork in a drawer for decades. Rusinko said that this is a bad idea.

“We make sure their wills and other papers are up to date,” she said.

Suppose your daughter is to inherit half your estate and your son the other half, but your daughter’s husband files for divorce and sues for a quarter of your estate to help care for your grandchildren?

When you filled out your POA, your son may have lived nearby but now he resides in California. While that does not make it impossible to decide matters for you, the child living nearby may make a better choice.

People do not plan their funeral.

It is not macabre to plan for the inevitable. After all, no one cheats death. However, you can lower its expenses. Pre-paying for your funeral locks in today’s prices to save your estate money. You can also spare your surviving family the struggle of planning the funeral and hoping that they are abiding by your wishes for burial, cremation or donating your body to science. You can also plan where you want to be interred and the service and calling hours (if any).

“Oftentimes, some focus on a plan for their funeral, but making those financial arrangements ahead of time helps,” Jarvis said.

Let your family know of where you have prepaid and where to find your copy of the documents.