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Retirement Planning in Your Vermont Estate Plan

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A comprehensive estate plan does much more than just dictate how your assets will be distributed after you pass away. It also helps you protect and grow assets while you are alive. Planning for retirement should also be part of a well thought out estate plan. Starting early with retirement planning can dramatically reduce the amount you need to save over time; however, an effective retirement plan is not just about saving money. Your retirement plan should also help protect and grow your savings as well as align your retirement strategies with your overall estate plan. To help get you started, the Essex Junction attorneys at Unsworth LaPlante, PLLC offer retirement planning tips to consider within your overall Vermont estate plan.

  1. Educate Yourself: Before diving into retirement planning, take the time to learn about basic financial and investment principles. This knowledge will empower you to make informed decisions and avoid common pitfalls. Understanding terms and concepts related to investing can help you navigate your options more effectively.
  2. Utilize Employer-Sponsored Plans: Many employers offer retirement plans such as 401(k)s. If your employer provides a retirement plan, make sure to take full advantage of it, especially if they offer matching contributions. Employer matches are essentially free money that can significantly boost your retirement savings. Even if you can’t contribute the maximum amount, try to at least contribute enough to get the full employer match. This can provide a substantial return on your investment, often 50 percent to 100 percent immediate return based on the match level. Additionally, these plans typically offer tax-deferred growth, meaning you won’t pay taxes on the contributions or earnings until you withdraw the money in retirement.
  3. Consider an IRA: Individual Retirement Accounts (IRAs) are excellent tools for retirement savings and can offer significant tax benefits. Depending on your situation, a Roth IRA or a traditional IRA might be suitable. Each has distinct tax advantages, so consider consulting a financial advisor to determine which is best for you. A traditional IRA allows you to deduct contributions from your taxable income, providing an immediate tax benefit, while a Roth IRA offers tax-free withdrawals in retirement. Furthermore, IRAs can be used to diversify your retirement savings outside of employer-sponsored plans, giving you more control over your investment choices and potential growth.
  4. Be Aware of Fees: Investment fees can erode your returns over time, so it’s crucial to understand what you’re being charged. Compare fees across different investment options and ensure they are reasonable for the services provided. High fees can significantly impact your savings, especially over the long term. For example, even a one percent increase in fees can reduce your portfolio value by as much as 28 percent over a 35-year period. Look for low-cost index funds or exchange-traded funds (ETFs) which often have lower fees compared to actively managed funds. Additionally, regularly review your investment statements and fee disclosures to stay informed and adjust as needed.
  5. Delay Social Security: If possible, delay claiming Social Security benefits. Waiting a few extra years can significantly increase your monthly benefit, providing you with a larger income in retirement. For instance, if you delay benefits until age 70 instead of taking them at 62, you could see an increase of up to 76% in your monthly benefits. This strategy can make a considerable difference in your financial comfort during your later years. It is particularly beneficial if you expect to live a long life or have other sources of income to rely on during the early years of retirement.
  6. Integrate Your Retirement and Estate Plans: Ensure that your retirement plan is compatible with your estate plan. This integration helps prevent conflicts and ensures that both plans work together to achieve your financial goals. Coordination between the two plans can help you manage your assets more effectively and provide clarity for your heirs. For example, your estate plan should include designations for your retirement account beneficiaries, ensuring that your retirement savings are distributed according to your wishes. Regularly review both plans to make sure they are up to date and reflect any changes in your life circumstances or financial goals.

Do You Have Questions about Retirement Planning in Your Vermont Estate Plan?

For more information, please attend one of our upcoming FREE webinars. If you wish to discuss retirement planning and your Vermont estate plan, contact an experienced Essex Junction estate planning attorney at Unsworth LaPlante, PLLC by calling 802-879-7133 to schedule your appointment today.

Wendy S. Hillmuth
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