10 Steps to Better Retirement and Estate Planning

“You really need to sit down with somebody,” says Carol Clark, principal at private wealth management company Lowry Hill in Minneapolis. “The key people to get on your team first are an accountant and an estate-planning lawyer. You may have a friend who’s a real estate attorney who helps you buy and sell properties, but it’s vital that the lawyer you choose be skilled in the estate-planning piece of it. You also need to review things like life insurance, because if all of your assets are in a liquid portfolio, you have to run the analysis whether it makes sense to carry life insurance anymore.”

“Part of the attorney’s job is to get the assets titled right and to try to structure the trust to minimize taxes,” explains Thomas Fee, principal and managing partner of Vector Wealth Management in Minneapolis. “The accountant’s role is to minimize taxation and to make certain that everything is paid as it should be. And the investment advisor’s role is to manage the portfolios efficiently and get the highest return given the clients’ tolerance for risk. But we also believe it’s really important to have a comprehensive wealth management viewpoint, where you integrate the disciplines of portfolio management with the understanding of how assets need to be staged given each person’s circumstances.”

2. Ask a retirement planner to create models for income generation.

Increased longevity has thrown a wrench into many of the traditional models for managing assets during retirement.

“Your retirement can be almost as long as your working life,” points out Todd Skotterud, marketing manager at St. Paul–based Wipfli Hewins Investment Advisors, LLC. “People are getting into their 90s consistently. They are going to need funds for health care, travel, and just plain living. So retirement planning ends up affecting their estate planning.”

Interest rates are on the lower end, too. Under these circumstances, the challenge for your retirement and estate-planning team is to help your assets remain stable throughout your retirement, or even grow.

“The first part of the formula is just trying to learn about what their income needs are,” says Sharon Olson, senior partner at Olson Weiss, a financial-planning firm in Bloomington. “Then we do a financial model where we take their assets, project out their income with an inflation adjustment, and assume some sort of rate of return. Then we try to project what different scenarios would look like—this is what it looks like at an eight percent rate of return, and this is if you started retiring at 62 versus 65. We model in the variables, and that really helps kind of put people at ease so they can see the possibilities. They know that there are always going to be variables, but they can see that under a particular set of assumptions, they’ll be fine.”