As individuals age, managing their bills, budgeting, investments, and taxes becomes a crucial part of maintaining financial security throughout their lifetime. While most people handle their bills and budgeting on their own, they may seek professional help for investments and taxes. However, it is essential to know when to seek assistance to avoid financial disasters in the future.
There are three main categories of how people approach their finances as they age. Some individuals let someone else handle their finances, usually in a marriage where one spouse takes charge. While this arrangement can be convenient, the non-financial spouse should understand the family’s financial situation and have a contingency plan in case of divorce or death. Having a financial planner in the background can also be beneficial.
Others manage most aspects of their finances but seek help for more complicated matters like investment planning and tax strategies. As individuals near retirement, managing savings plans from different jobs and ensuring their investments align with their goals can become challenging. Seeking professional help can provide assistance in navigating these complexities and planning for retirement effectively.
On the other hand, some individuals prefer to do everything themselves and do not rely on anyone for help or advice. While this group may excel in managing their finances when they are young, they can develop blind spots as their assets grow. Cognitive challenges that come with aging can also affect their ability to make complex financial decisions, highlighting the importance of transparency and seeking professional advice.
In a case study, a client’s engineer father had significant assets but lacked proper estate planning and tax efficiency strategies. By consulting with a financial planner, the family was able to save an estimated $600,000 in income taxes and probate fees by making necessary adjustments to the father’s investments and trust. This emphasizes the importance of seeking guidance from a fee-only fiduciary and developing transparency with family members.
For individuals in the do-it-yourself group, finding a fee-only fiduciary for a second opinion on their financial strategies is recommended. Establishing transparency with family members and creating legal agreements can help ease financial caregiving transitions in the future. Ultimately, the goal should be to have a successful financial story rather than a potential disaster, emphasizing the importance of seeking professional guidance and planning for the future effectively.
