One of the most important components of estate planning is ensuring that you have an in-depth understanding of your assets. Not only is this important at the onset of estate planning, but it is an important factor to consider when looking down the road to the future. With lawmakers painting a sometimes bleak and uncertain future for social security, many individuals are looking at ways to plan for their financial future in case they are unable to rely solely on social security. While this is certainly a wise financial move, discounting social security’s impact on your estate can be a costly mistake.
As it stands now, social security provides a steady stream of monthly income when conditions for its receipt are met. That’s not likely to drastically change anytime soon. Given that the current projected life expectancy for those turning 65 this year is approximately 85, those monthly payments could add up to around $1 million over the terms of period of installments. A recent article from MarketWatch.com reminds us that we should not discount the impact social security can have on our estates, and an experienced estate planning attorney can help you understand what social security benefits can meant to your estate.
Social Security as a Safety Net
When you have a guaranteed monthly income, you can make more informed choices regarding important financial matters. Knowing that monthly social security payments can be used as a safety net to at least cover basic necessities can give you more room to expand your investment portfolio without worrying that you may need to rely on funds tied up in financial transactions. This can also help you delay penalties and other fees that might be associated with withdrawing assets from your financial portfolio, including retirement accounts and other investment options.
Social Security as an Investment Tool
Another approach for financially secure individuals in utilizing social security benefits is to collect them as soon as you are eligible and to use those monthly payments to invest in continued financial security for you and your loved ones. While opting to collect social security when first eligible will likely result in a reduction of the monthly benefit received, if you do not depend on the monthly social security payment and instead redirect those payments to opportunities with greater financial prospects then the amount of benefit collected is less important.
Social Security for Long-Term Medical Care
Long-term medical care can be costly and cause a significant reduction in the size of your estate, even if your estate is quite large. By using social security benefits to pay for long-term care insurance and/or by investing social security benefits, you can provide financial security for yourself and your loved ones in case of any debilitating disease. Chronic medical problems can plague older individuals, and the care associated with such conditions can drain your financial security in a matter of months. By using social security benefits to potentially help offset the costs on long-term care, you position yourself to better handle the costs of such serious medical conditions before they arise.