Whom do you trust to give you financial planning advice? Your accountant? Your kids? The guy you have coffee with at Dunkin Donuts? Your lawyer? God forbid. The point about financial planning is that you can’t plan how to get where you want to go unless you know where you’re going. Here are my contributions to the advice list:
- Stay flexible. Avoid investments with a big penalty for early withdrawal. The lure of a slightly better investment return on an annuity may be outweighed by the penalty.
- Consider early withdrawals (at lower tax rates) from your tax-deferred savings. If married, the federal tax rate on income of less than $80,000 is 12 percent or less. Withdraw small amounts over time to reduce the potential big federal tax hit (22 percent or more) that would come if you needed to withdraw money suddenly.
- Keep your investment risk low.
- Make sure all of your advisors talk to one another. Each one is approaching things from a different angle. Gather them for a conference call.
- Update your power of attorney. A lot of asset restructuring may be needed after you are incapacitated, especially if you need to qualify for MassHealth.
I will be discussing financial planning in more depth during this month’s elder law virtual seminar, which can be watched on Frank and Mary’s YouTube channel, youtube.com/elderlawfrankandmary, and on your local cable station, MVTV, along with the “Frank and Mary on the Vineyard” cable TV show, where my co-host, Sandie Corr-Dolby and I, address many common issues facing seniors and the resources available during the pandemic. If you have any questions, please contact me at 508-860-1470 or abergeron@mirickoconnell.com.
Arthur and Leah are elder law attorneys in the trusts and estates group at Mirick O’Connell.
