While estate planning is primarily a way to protect your assets for your heirs, it is also about financial management for yourself while you are alive. While it is important to save for the future and to be able to pass some along to your heirs, you still need money to pay for day-to-day expenses, things you want to buy, and emergencies — especially in retirement.
There are a number of ways to save for retirement that you will use to provide income after you have retired. Annuities and retirement accounts are the two best ways to do this.
- A lot of financial experts suggest you keep enough in savings or other readily available sources of cash to handle emergency situations. However, it can be difficult to know how much that is.
- Situations such as a severe or terminal illness are even harder to predict and can often put extreme financial stress on you and your family.
- The cost of medical care not covered by health insurance is usually a major factor.
- The loss of income due to the illness can be a big factor, especially if you do not have insurance or other ways to replace income while you are ill.
- In these circumstances, you can access this money before retirement. Most annuities and retirement accounts don’t restrict you from removing funds, but you will pay penalty fees if you do not have an approved reason to.
- Many of these accounts will allow you to take a loan from the funds, without penalty if you pay back the entire loan.
- All of them allow removal of funds for serious and terminal illness, although with employer sponsored accounts you have to add this option at the start and only if your employer allows it.