Covering Retirement v. Leaving Inheritance

Nursing Homes

Expenses in senior years continue to be a concern for many Americans. As multiple studies show, most individuals do not maintain adequate retirement contributions. As the costs of long-term care (LTC) insurance policies and LTC costs rise, leaving a legacy behind is becoming less of a priority for some. Financial service and insurance company TIAA-CREF released a survey recently that shows high-net-worth (HNW) individuals are more concerned about covering their retirement expenses than leaving an inheritance to children or surviving family.
The survey also found that HNW individuals are interested in generating income in retirement. Whether this means a working retirement, additional investment options, or a combination of both, the survey found these are the priority and only 5% were concerned about preserving assets for heirs.
Although the mindset of the majority is focused on taking care of their own retirement needs, there are opportunities to maximize savings for costs later in life and preserve as much as possible for loved ones.
Three things to consider when preserving an inheritance and planning for retirement in North Carolina:
  • Marital status. Unmarried seniors might benefit from keeping their single status in retirement. For example, if a divorced spouse receives alimony benefits, re-marriage could prevent continued receipt of payments. Those additional payments could be contributed to a retirement account. If the savings are not used before the account holder dies, their loved ones could benefit from an Inherited IRA.
  • Tax planning. Proper tax planning can help individuals strategically time withdrawals, make deductions, structure assets, and make gifts. Tax-conscious planning allows retirees in North Carolina to reduce the amount that would have been spent on taxes. The accumulated savings could be used to cover care costs or included in an inheritance for loved ones.
  • Relocation. The retiree might consider relocating, both for tax purposes and for the benefit of reduced care costs. The median cost for private nursing home care in North Carolina for 2015 is $82,125; the Durham-Chapel Hill area median rate is $96,407. Our estate planning attorneys also serve Tennessee, where the private nursing home median costs are $75,555. Before moving, meet with an elder law attorney to comprehensively review the benefits and disadvantages associated with relocating to another jurisdiction. For example, North Carolina does not impose a waiting period on long-term care policies, but other states might.
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