So, you’re graduating from college – congratulations! You’re headed out into the world and there are lots of great opportunities waiting for you out there, but how do you make the most of these years ahead and ensure a secure, happy future for you and your loved ones?
Form a Plan and Stay in Control
One of the first things to understand about the decades between graduation and retirement is how closely financial planning and estate planning fit together. You’ve got a long career and life ahead, so protecting that future is most easily achieved by proactively engaging a trusted advisor to not only map out a plan but to help you shift and adapt that plan as your goals and circumstances change over time. There is never a “wrong” time to plan for the future but getting started at the beginning your career is certainly the best time – this is why the foundational documents of an estate plan are a fantastic graduation present.
Many young adults entering the workforce and achieving new levels of independence fail to consider the reality that, as adults, no one is able to care for you on your behalf without prior consent. Two tools designed to address this scenario are Financial Power of Attorney and Healthcare Power of Attorney, as they provide a clearly defined and agreed-upon support plan should you become incapacitated or unable to make decisions for yourself. Both are relatively simple and straightforward documents, but their impact can provide peace of mind for years to come.
Understand the Different Types of Assets
Another common misconception among those at the start of their career is that a will is unnecessary due to a lack of assets worth protecting. This could not be further from the truth; vehicles, bank accounts, and even pets are examples of important assets that are often overlooked when considering what is included in your estate. While some may mistakenly believe that a will is something to be done at end-of-life, the truth is that it can, and should, be done as soon as you begin accumulating assets as it can be easily updated over time as things like IRAs or 401Ks are factored into your estate.
As the job market continues to evolve, another unique experience afforded to professionals of today and tomorrow is the ability to earn stock or a stake of equity from your employer earlier than typical in past generations. While this presents a tremendous opportunity, it also adds complexity when outlining the assets of your estate. This is especially crucial in the case of LLCs or entrepreneurial ventures where partners or shareholders are added into the mix. What are the buyout terms of the agreement? What becomes of your stake in the business if you are disabled or incapacitated? These are important scenarios to address before an unforeseen event brings them to the forefront.
People, Places, and Things: Discuss Shared Ownership Early
Real estate is another area that plays a significant role in planning your estate and can change dramatically between graduation and retirement. Properties that span generations are a classic example: many New Hampshire residents know (or perhaps own themselves) a generational family lake house or vacation property that is owned by few and enjoyed by many. While many families wish to simply “figure it out” over time, this informal approach rarely works in the long-term when questions of paying for repairs, taxes, or even a possible sale of the property come into question. By proactively broaching the topic of intergenerational ownership or a succession plan for generational wealth, families can spend more time actually enjoying these assets instead of stressing over what will become of them in the future.
As a new graduate entering the workforce it may feel as though retirement is a lifetime away, but life has a funny way of speeding up when we aren’t paying attention. As you head into the prime working years of your career, don’t discount the value of these simple steps that can be taken today to ensure a happy and healthy future for you and your loved ones in the years to come.