Bad Axe elder law attorneys assist you in the creation of your retirement savings plan. Having too little saved for retirement could be devastating, as living off Social Security alone is difficult or impossible. The average Social Security payment in 2016 was just $1,341 monthly, according to the Motley Fool, which would mean your income on Social Security alone would be fairly close to the poverty level.
If you don’t want to end up with insufficient funds during your golden years, you should make plans as early as possible in your career to grow and protect your wealth. Biddinger & Estelle is here to advise you on the accounts you can use to save, as well as on the steps you need to take to protect your retirement nest egg.
How Should You Save for Retirement?
There are a number of key considerations to think about in determining how best to structure your retirement savings.
One of the first considerations is whether you are eligible to make tax-advantaged retirement investments. This would mean investing in an account that you can either invest in with pre-tax dollars or that you can withdraw money from tax-free. A traditional workplace 401(k) plan, a traditional IRA, a SIMPLE IRA, and a SEP IRA are all examples of the types of accounts you can invest in with pre-tax dollars. A Roth IRA or a Roth 401(k), on the other hand, allow investments with after-tax funds but you can take out money tax free, including gains that you earned on your investments in the account.
You will need to think about many different factors, including your tax rate now and your likely tax rate in the future, as you determine which of these different accounts is your best option for retirement investing. You’ll also need to understand eligibility rules for each of the different accounts, as there are maximum contribution limits to be aware of and high-earners can sometimes lose the ability to make tax-advantaged investments in traditional and Roth IRAs.
As you grow your wealth, you also need to think about how best to protect the assets you are acquiring. There could be many possible risks to the money and property you build up during your lifetime, even though these assets should be there to ensure you’re provided for during retirement.
While 401(k) accounts, IRAs and other tax-advantage retirement accounts have some built-in asset protection because these accounts are treated differently than other investment accounts in the eyes of the law, you likely have many assets that are still vulnerable to creditor claims or other sources of loss. You should consider the use of trusts and other tools to keep your growing wealth safe as you work hard to acquire money and property that will see you through your retirement.
Because you face new risks as you get older, including the potential chances you will end up needing nursing home care or long-term care, you should also make certain that any plans you make for your retirement take healthcare costs into account. Studies show that seniors may need as much as $350,000 saved for healthcare costs during their retirement years, and many people fail to make a plan for covering healthcare costs.
Medicare does not provide coverage as comprehensive as many people believe, and there are large gaps in coverage, including a prohibition on Medicare covering custodial care. Custodial care is the type of care that most older people need when moving to a nursing home or hiring a long term care aide. You’ll need to think about making a Medicaid plan to protect your wealth in case you need this means-tested benefits program to pay for long term care or nursing home care some day when Medicare won’t provide the coverage you require.
Getting Help from Bad Axe Elder Law Attorneys
Residents of Michigan’s Lake Huron shoreline communities count on Biddinger & Estelle to provide the comprehensive help they need in making plans for a secure retirement. Whether you want advice on IRAs, are looking for information on making a Medicaid plan or want any other assistance addressing the issues that matter as you grow older, we are here to help. Contact our Bad Axe elder law attorneys today at (989) 872-5601 or reach out to us online to find out more about the ways in which our legal team can help you.