Considering the net value of your assets — and your debts — is a good place to begin if you are looking into your estate planning options. To know how to pass that wealth on effectively, you need to know exactly how much you have. People often underestimate or overestimate their wealth, so it’s crucial to take stock of everything.
Average wealth at retirement
Though it is impossible to know when you will pass away and it is, therefore, necessary to do estate planning long before you reach retirement age, looking at the wealth of retired individuals is still a good place to start if you want to know how much people generally need to include in these estate plans.
With that in mind, the average net worth for those from 65 years old to 74 years old clocks in at $1,066,000 according to some reports. If that sounds like a lot, it’s still perhaps not enough. These same reports note that people who want to live with an average of $70,000 every year after they retire need to have over $1.7 million. The average is just over half of that, and, though it breaks that $1 million mark, it may leave them with less than they’d expect.
Even so, the average gets dragged upward by people with extensive wealth. One billionaire significantly changes the picture. If you instead look at the median net worth of retired people, it drops all the way to $224,000.
Your estate plan
These numbers impact your estate planning in a few different ways. First of all, remember that estate planning is also about medical needs, assisted living costs, powers of attorney and much. It goes far beyond just dividing assets.
Your financial picture as you age helps determine what you need to consider. Do you want to put money into a trust to protect it? How much do you really need if you’ll end up living in a nursing home? What is the tax burden on your estate? These are all important questions to ask.
Beyond that, you need to consider how much of your estate will really pass to your heirs. Even if you feel like you have substantial wealth now, while you are still working, what will it look like after you retire? What types of plans do you need to make now so that you can provide for your heirs in the ways that you have always hoped you could?
In many ways, the key is to get started as far in advance as you can. Take the time to really look into all of your options in California so that you can do what is best for your family and your estate.