Young or even middle-age adults in New Jersey may think that since retirement is decades away, they can wait to execute an estate plan or care plan, and even retirement planning in these early years is not so important. However, retirement planning and estate planning should be done as soon as one is able to do so. This way, they can protect themselves and their loved ones once they have retired and are physically or mentally unable to care for themselves.
Retirement begins first with the accumulation of savings while working. These savings may accumulate in a 401(k) or, less likely, through a pension. Following that comes the preretirement phase. In general, this starts once a worker is around 15 years away from retirement or is 50-years-old. Estate planning, if it hasn’t already started, should be made a priority at this phase.
Next comes early retirement, which spans from the date of retirement until one is age 72. At this point, a person should make sure their loved ones are aware of their end-of-life and long-term health care preferences (as legally documented in a living will and health care directive) as well as their financial plans and needs for the future. Asset protection planning is also important.
Following that comes mid-retirement. This phase begins around age 72 and ends once a person is no longer able to care for themselves. It can be difficult for people to come to terms with the fact that their mental and physical abilities will decline as they age, as this means letting go of one’s independence. This is the point where one’s asset protection plan becomes effective, especially in light of Medicaid’s five-year look back requirement.
Finally, there is late retirement. This commences once a person’s health has gone downhill with little expectation that it will improve. Hopefully a person has a solid elder care plan and asset preservation plan in place, as suggested in the earlier phases of retirement. Otherwise people find themselves in a “crisis planning” situation where they are seeking immediate financial protection.
At our firm, we understand how elder care planning begins as early as one’s working years. The sooner one starts estate planning, the better. With a proper estate plan and asset protection plan in place, not only will one’s wishes and care be handled in their desired manner, but a person’s loved ones will know what decisions to make once their loved one becomes infirm. Our elder law webpage and retirement planning webpage may be a good starting point for those who want avoid crisis planning when it comes to their health and finances.