An overview of the "senior" year of Making Your Money Matter classes - learn more about retirement and estate planning for your future.

Senior Year Overview

An overview of the "senior" year of Making Your Money Matter classes - learn more about retirement and estate planning for your future.Can you believe you made it through the entire senior year? My senior year of high school and college both went by so slow, but this one just flew by! It’s appropriate that these topics were listed in the “senior” year because they have to do with things that you associate with “senior” citizens: retirement and estate planning.

To summarize what we’ve learned this “year”, we’ve covered the following classes:

  • RE401: Calculating Retirement Needs – The basics of how to calculate your retirement budget in order to determine the lump sum you will need for retirement at your desired retirement age.
  • RE402: Qualified Retirement Accounts – A summary of the rules, requirements, and opportunities for retirement plans such as 401k, 403b, 457 and Thrift Savings Plans.
  • RE403: IRA Account Fundamentals – An overview of rules, requirements, and features of IRA accounts including both traditional and IRA accounts.
  • RE404: Social Security & Medicare Essentials – How social security and medicare fit into your financial plan for retirement. Also, how social security benefits are calculated and how to find your expected future social security benefits. Also, how Medicare currently works.
  • ES401: Essential Estate Planning Documents – An overview of the most important documents to have in place including a last will & testament, a living will, medical & financial power of attorney, and (for some) a revocable living trust.
  • ES402: Introduction to Gift & Estate Tax – A brief summary of the lifetime exclusion that applies to gift and estate taxes as well as other components to calculate the taxable estate.
  • ST401: Other Employment Benefits – A list of benefits that may impact your financial plan including paid leave, wellness incentives, transportation reimbursement, tuition assistance, worker’s compensation and employee stock options.

REVISE YOUR FINANCIAL GOALS

It’s that time again when you should go back and revise your financial goals. This time, you’ll look for any goals that are related to your retirement plan, such as 401k or IRA contributions, or your estate planning, including setting up a will or trust.

The specific questions that you should ask yourself at this time include:

  • Does my retirement goal need to be revised with regard to either the amount or date of expected retirement?
  • Should I be increasing my retirement contributions to my 401k (at least to employer match!)?
  • Would it be beneficial to start contributing to either a Traditional or Roth IRA?
  • Am I comfortable with my current retirement plan including or not including Social Security benefits as part of the calculation?
  • Do I need to add any goals related to ensuring that I have proper estate plan documents in place (for example, adding a goal to create a will or trust)?
  • Should I meet with an attorney to discuss additional estate planning opportunities (essential if you currently have or expect to have an estate over $5.49 million)?

EXAMPLE: THE SMITH FAMILY

The Smith family (used as an example family in each class) makes the following changes (in red) after looking at their retirement and estate planning goals. Highlighted in blue are tasks/goals that they’ve completed already.

Congratulations on completing your Senior year of learning about MAKING YOUR MONEY MATTER.

What is one thing you learned from taking the senior year classes?

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9 Responses

  1. My weakest area by far is estate planning and I learned a ton around it and as a great reminder, I need to get my will completed sooner rather than later. I’ve really enjoyed the formatting of the classes and look forward to see if you go on to grad school or even a phd 🙂

    1. I think grad school is going to wait a little while. I got senioritis there at the end-lol! If I do go on, what would you like to see in grad school?!

  2. I still need to figure out the correct questions to ask to ensure I can build my wealth wisely.

    I just did an analysis on my blog of what my financial goals are in 2017. I’m going to pay down debt and invest in my IRA and 401k. Then in 2018, I can focus on building my portfolio more prudently.

    Thanks for sharing, I’m definitely looking forward to the next set of courses!

      1. Hi Kathryn,

        I would urge you not to put any money into a Roth IRA. If you are looking to retire prior to age 59.5, why put restrictions on money that otherwise will be taxed at 0%, assuming you are in the “15%” federal tax bracket? An early retirement usually doesn’t include a lot of earned income, so it’s easy to stay in the 15% tax bracket.

        Also, with 3 kids, your options of keeping your taxes low are infinitely higher. You also have three child tax credits per year, plus 3 personal exemptions per year, to take advantage of for many years.

        Cheers

        1. I love my Roth IRA and am balancing my retirement investments between it and a traditional 401k. I’ll keep adjusting my plan as I go, but I think it’s going to provide a really good balance for me in retirement years.

          Here’s my rationale:
          1. I’m hoping to live at my current lifestyle during retirement, which would likely put me in more than the 15% tax bracket if I invested solely in traditional retirement contributions, which will be fully taxable to me at that time.
          2. I have a LOT of years to take advantage of the tax-free growth in a Roth IRA since we will not be retiring for 30+ years.

          At higher income levels, child tax credits and personal exemptions phase out, and higher marginal tax rates make my traditional 401k contributions even more valuable to me. I’m balancing getting some benefit from that as well as the benefits I mentioned from my Roth IRA. My plan is likely not perfect, but we are also not planning to retire early as my husband loves his job and has the opportunity to do even more things he loves there in the next couple decades.

          1. I think everything will change in five years for you, much less decades. Retirement articles say people retire 3 years, on average, earlier than they plan to.

            Also, I am curious, what is the “lifestyle” benefits you are planning. For example, does having a newer model late car make you happier? I went to my son’s kindergarten performance at 9am this morning, in spite of being ridiculously busy at my full time job (can’t you tell, that’s where I am typing this right now). I can’t imagine anything that would make me happier, in life, than spending time to see this.

            One down, one to go. Wife is free and I can’t wait to join her. We didn’t even do our Roth rescue until age 38. Also, taxable accounts also have the added benefit of tax loss selling. We sold one ETF and bought another one in both 2015 and 2016. These taxable accounts have provided us with approximately 4.5 years of deductions against our “ordinary income” (2015 return-2019 return) at the 25% tax bracket. Had this money been stuck in our Roth IRA’s, this big advantage wouldn’t show up on our return 🙂 Cheers.

          2. I love the FIRE movement. We’ll likely achieve the FI long before we RE. As of now, my husband’s absolute dream is to do exactly what he’s doing right now, despite the fact that it involves going to work 5 days a week and dealing with some stress (he has a lot of flexibility and is nearly always able to attend our kid’s activities even mid-day). And you’re right, maybe things will change down the road and we’ll change our plan accordingly. I had to laugh a little at your example, because my husband is an automotive engineer and cars will always be a big part of our lives. And nope, I won’t be any happier with a late model car than I would be otherwise. I bet we have a lot of the same views in our perspectives about money :).

            It sounds like you’re super on top of your taxes – I love to hear it!

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