For Peak Earning Years

Planning for Peak Earning Years

Serving Clients in New York City and the New York Metropolitan Area


Are you between the ages of 40 and 55? If so, then research shows that you are in your peak earning years and that is a very good thing.

Chances are good that you have some expensive life events going on right now. Do you have children who are college-bound or already there? Do you have a wedding scheduled (or one or more down the road)? Are you about to be grandparents? Perhaps you are beginning to help aging parents with personal, health care and financial responsibilities.

I know you may be busy, but this would be a good time to create (or revisit) your estate plan and make sure you and those people who depend on you, such as your adult child(ren), grandchild(ren) or parents have their legal house in order as well.

Unfortunately, many married couples believe that they can make decisions (whether personal, health-related or financial) for each other should either spouse become unable to do so due to a serious injury or illness. This is not always true! Without proper advance planning which appoints you as your spouse’s decision-maker, you will be unable to act in that role, as a spouse does not have legal authority to make even fundamental financial or health care decisions affecting you or the both of you without written authorization. For example, medical privacy laws will deny your spouse/partner access to your medical records and the ability to consult with your physician(s). Financial privacy laws limit control over finances, and IRS regulations prohibit filing an income tax return without written authority, just to name a few.

Unless you legally appoint an agent in advance through the proper estate planning document, such as a power of attorney, health care proxy, or even a trust, then a court may need to select an agent for you. While the judge will likely appoint your spouse, the court process to accomplish this is long and expensive and can be a burden to your family.

Did you know that without having a plan in place for your assets when you die, such as a Will or Trust, your assets may be distributed based on broad state laws written following strict family tree relationships and rules? Of course, this very impersonal estate plan is written by state lawmakers to follow family bloodlines only. This type of plan is unlikely to reflect your own unique circumstances and objectives for your heirs, your spouse and family, and assets. In fact, depending on how your assets are titled and how your beneficiary designations are arranged, a haphazard plan could partially disinherit your spouse or other important non-family heirs.

Fortunately, we can help you avoid this state-determined inheritance plan and complicated surrogate process and replace that impersonal estate plan with one we design together for your unique circumstances and objectives. We can even assist you with coordinating the beneficiary designations on your life insurance policy(s) and retirement plans. This can avoid unpleasant and unintended consequences. In addition, you may need to review your retirement plan beneficiaries and revise the appointments, considering the value of this asset and the underlying tax concerns for the named beneficiaries, which recently changed in 2020 under the SECURE Act.

When it comes to your children, great care should be given to protect any inheritance both for them and from them. Wealth representing a lifetime of your hard work and thrift can be mishandled very quickly. In addition to good old-fashioned spending, an inheritance can quickly vanish through poor judgment, divorces, lawsuits, bankruptcies and catastrophic illness.

Fortunately, with proper (and very careful) estate planning, married couples can both honor their vows and provide an inheritance that protects both of them, including their children or other family members.

Are your parents aging or transitioning to some form of long-term care? If yes, you will soon learn how expensive the continuum of extended care can be. In-home assistance, assisted living, or skilled nursing care expenses can destroy savings and investments created over a lifetime of hard work. You and your parents may need guidance to preserve their assets for yourself, your children and your aging parents themselves.

Your peak earning years are the perfect time to consider purchasing long-term care insurance policy(s) while you are able to physically and mentally qualify. Some versions of coverage only pay if you need long-term care assistance, but others can do double-duty and turn into life insurance if you never need long-term care. That is a popular alternative to traditional long-term care insurance. Our firm can help your select the type of policy to meet your needs and your budget.

There is a 70% risk of needing long-term care in your later years. Curiously, 70% of people think they will not be among this statistic group and think Medicare will pay for it! You do not want to be in that 70% who are in denial, misinformed or both. The catastrophic healthcare cost of a chronic long-term illness such as Alzheimer’s is only minimally covered by Medicare or transitional insurance.

These “peak” years are the perfect time to analyze your retirement planning and make the necessary changes to ensure your later years are both comfortable and financially viable.

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