We All Get Old: How To Financially Prepare For Retirement

After living as a gay family for a lifetime the lucky among us will retire. Age in itself is good though some in our LGBT culture have a certain disdain for the old; age is after all the reward for not dying young.

Approaching retirement can be scary with its litany of changes. With age differences in the family one might be retiring while the other is still in their prime earning years. Choosing a place to live in retirement, and making the move are stressful times. Deciding how much money is required for a comfortable retirement remains a big unknown. Providing for health care between an employers group plan and Medicare has to be considered.

Yet each challenge simply requires thought and a plan.

Those LGBT retirees lucky enough to have a pension and retirement health coverage will often bemoan the pittance they receive monthly. To those I retort; do you know what you have? Here’s why: take the amount of your pension plus the value of your health coverage and enter it into a reverse future value calculator. If you receive benefits worth $2,000 per month you would have to have over $500,000 in wealth to generate the same $2,000 per month at today’s miserly interest rates.

Consider those who do not have the benefit of pension or health coverage, such as my husband and me. The good news in our case is that we knew early on that we never would have the luxury of a pension and health coverage and made a plan to create our own wealth sufficient to provide similar benefits. Unlike a pensioner, we are in control of our retirement funding and not reliant on the benevolence of a corporation or tax collecting authority to honor their often generations old commitments. I consider that a particularly valuable benefit in the current uncertain economic climate.

How much income do you need to retire? Though no one can give you the exact number the amount is rather simple to calculate. Much of the calculation is predicated on the life style you intend to live in retirement; our life didn’t change a great deal after I retired with the exception that I travel more. The major change is that saving for retirement is no longer required, nor are the costs associated with employment such as the commute, office lunches and work related clothing. My experience has been that I spend about what I spent while working, only now I spend it on different things.

Approaching retirement is a good time to begin to spend as if retired. Retirement is a time for disposing of things, not acquiring them. Retirement is for leisure, not chasing the next great technology. Planning for retirement includes considering how life will be different the day after you no longer report to work.

Those who receive pensions should check with their provider for survivor benefits for LGBT partners. Some provide them, typically with a reduced monthly benefit during the live of the pensioner; some will also provide partner health benefits. Knowing your options both during your lifetime and for your survivor will allow you to maximize your benefits.

Sadly, with the current mix or legal protections and lack of legal protections across every governmental level LGBT persons can not rely on settled law to serve them in the event of the passing of a partner.

For assets outside of pension plans LGBT persons are best served by a qualified estate advisor. Those pesky relatives will stick their noses in when they smell money; nothing changes things like money.

My husband and I simply created two revocable trusts and re-titled all our existing bank and investment accounts and titled personal property as owned by the trust. The trust documents require a trustee, which in our case is each of us for our own trust. In addition, each of us is a trustee of the other’s trust. In the event of the passing of either of us the survivor is the sole trustee of both trusts. The arrangement avoids the probate process and removes any opportunity for a frisky family member to reach out a sticky little hand.

Some assets cannot be re-titled to a trust, such as 401K, Roth and IRA accounts. These accounts simply require a beneficiary and naming my husband my beneficiary protects those accounts from intrusive family members. Inheritance rules related to self managed retirement accounts are changing and your estate advisor is best served to advise you on the use, management and timing of your self managed retirement accounts to minimize tax consequences both during your lifetime and for your survivor.

Remember, there is no reason to wait until you are a gray gay to plan. Now is the time because you never know when the time is up.


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