Canada
US
You are now leaving our website and entering a third-party website over which we have no control.
Spring 2025
James H. Beam Jr.
Head of TD Wealth Planning, Retirement & Strategy (U.S.)
Mark D. Hasenauer
TD Wealth – Planning & Goals Based Advice Leader
Ashley W. Weeks
Editor-in-Chief TD Wealth – Wealth Strategist
Featured Articles
INVESTMENTS, SECURITIES AND ANNUITIES |
||||
NOT A DEPOSIT |
NOT FDIC-INSURED |
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY |
NOT GUARANTEED BY THE BANK |
MAY GO DOWN IN VALUE |
"If you don’t know where you're going, you might end up someplace else." – Yogi Berra
If personal finance were a religion, a lifetime of "good works" including consistent investing and diversification would likely be rewarded with the highest state of individual existence: Retirement!
The idea that retirement is the great panacea after decades of labor is often ingrained without much thought around what the months, years and decades in retirement will look like. If you can afford to do nothing, what will you actually decide to do?
The financial industry typically focuses on the quantitative, things like investment risk, tax optimization, and decumulation strategies. However, a growing body of research has centered on the psychological and emotional challenges that accompany transitioning out of full-time work. It turns out that retiree well-being is directly linked to maintaining a sense of identity and purpose which is often overlooked in the planning phase.
Understanding the emotional stages of retirement before the big day can better prepare near retirees for a successful and fulfilling transition.
What are the Five Retirement Stages?
- PRE-RETIREMENT
The five years leading up to retirement comprise the pre-retirement phase and near retirees typically focus on their financial preparedness.
Best Practice: In addition to getting their finances in order, pre-retirees should take time to envision and identify goals for early retirement. It is also important to invest in relationships before retirement, having a social support system outside of the office will be vital for retirement well-being. - DAY ZERO AND THE HONEYMOON
Sweet freedom! The big day arrives with much excitement (and some anxiety). Released from the structure of daily routine, the newly retired often spend time on rest, recreation, and leisure activities.
Best Practice: Enjoy the newfound flexibility, it's well earned. Try to establish a new routine with intentional social interactions and physical activity and revisit retirement goals. - DISENCHANTMENT
When every day is a vacation, there are no vacations. Without a productive pursuit, endless leisure begins to feel empty, and retirees may ask, "is this all there is?" In their 2024 Retirement Confidence Survey, the Employee Benefit Research Institute indicated nearly one-third of respondents reported not having the retirement lifestyle they envisioned. Best Practice: Retirees should acknowledge two basic facts: becoming disenchanted with unlimited free time is entirely normal, and it will take some focused self-reflection to identify the thing that leads to true long-term fulfillment: purpose. - REORIENTATION
Finding renewed purpose involves replacing two things a career often provides, engagement and a source of identity. Unfortunately, there is not a set formula here, but many retirees have found renewed purpose through interactions including mentorship, volunteering, community engagement, learning opportunities, and passion projects.
Best Practice: Understand that there is no "one size fits all" and the reorientation phase is an exercise in introspection. Research tends to suggest that maintaining close connections with others will go a long way toward fulfilment, and the importance of regular physical activity for physical and mental health in retirement cannot be overstated. - ROUTINE AND STABILITY
The ultimate goal for a well-adjusted retirement is to find authentic purpose and build new routines around those sources of joy. Many retirees learn that the thing they loathed while working, daily structure, is actually a useful tool for retirement well-being.
Best Practice: Develop and embrace healthy routines and acknowledge that retirement is an evolution, just like any other phase of life.
FINAL THOUGHTS
During working years, planning for the mental and emotional aspects of retirement often takes a backseat to the financial considerations. However, it is possible to shortcut some of the less enjoyable stages of retirement by reflecting on the need to find post-career identity, purpose, and routine long before the retirement party invitations are mailed out.
Less than half of American adults have prepared a Last Will and Testament.
There are various reasons why estate planning is often delayed or ignored entirely. Life gets busy, legacy decisions are hard, and death is not much fun to think about.
Formalizing the distribution of assets with estate planning documents can be fraught with complexity and concerns around family harmony and perceived fairness. However, failing to create a written plan often means surviving loved ones may be stuck with archaic intestacy rules and a more complicated legal process.
To get the ball rolling on an estate plan there are just a few key objective based questions that need to be answered. With the key priorities outlined, your estate planning attorney can tailor documents to meet the objectives considering the assets and circumstances involved.
The Key Estate Planning Questions
The heavy lifting with an estate plan is primarily accomplished by thoughtfully answering a few critical questions. Once the major goals are outlined, a qualified attorney can create documents and structures to effect those objectives in the most efficient way possible.
Consider using the questionnaire provided in the following link to organize your key estate objectives: Legacy Planning Organizer
Whether you are serving as a caregiver or making your own plan, there is a lot to consider regarding incapacity.
When engaged in financial planning a great deal of effort often goes into an estate plan, the process of organizing a legacy and determining who gets what and how after death. Far too often the issue of “incapacity planning,” planning for the inability to manage one’s affairs while alive, is merely a side note or ignored entirely. There can be many causes for adult incapacity, but one of the most prevalent is the onset of dementia. In their 2024 report, the Alzheimer’s Association projected that 10.9% of Americans over age 65 suffer from Alzheimer’s dementia, and for Americans over age 85 the projected prevalence of Alzheimer’s dementia is 33.4%.1
Given increases in life expectancy and the relative likelihood of experiencing diminished capacity later in life, it is important to understand what documents are necessary to ensure access for caregivers and continuity of care.
Medical Directives
Many people are familiar with the concept of a “Living Will” or “Advanced Directive,” a document that indicates end of life care preferences when a patient can no longer provide informed consent. A similar document is a Health Care Power of Attorney, which designates another individual to make health care decisions for a patient once they are no longer able to give informed consent.
An interesting feature of Advanced Directives and Health Care Powers of Attorney is the fact that in many states, these forms are codified by law and the state sanctioned templates can be acquired free of charge. More significantly, physicians and health systems are accustomed to forms that are codified in their state of practice. While a healthcare directive from another state is perfectly valid, a hospital may be slow to honor an unfamiliar document. For this reason, it is a very good idea to execute updated health care forms when relocating or retiring to a new state. Copies of the Advanced Directive and Health Care Power of Attorney should be provided to your primary care physician as well as potential caregivers.
Special Considerations for Federal Health Benefits
- Medicare – Medicare has a distinct authorization form that is required to grant another person access to your personal medical information. It is a good idea to execute the “1-800-MEDICARE Authorization to Disclose Personal Health Information” form if you would like a caregiver to have access to your Medicare records.
- Veteran's Health Benefits – Veterans who are entitled to health care from the Department of Veteran’s Affairs (“VA”) should take note that the VA has its own sanctioned “VA Advanced Directive” form for appointing a health care power of attorney and specifying end of life care preferences: VA Form 10-0137.
Financial Directives
Separate and distinct from medical care is the issue of managing an incapacitated person’s finances and property. If no planning is performed prior to incapacity a costly and public court proceeding, typically called a conservatorship or guardianship (depending on the state), may be the only option. To avoid the expense, delay, and publicity of a legal proceeding it may be prudent to utilize one or both of a Revocable Living Trust and a Durable Financial Power of Attorney as discussed below.
Revocable Living Trust
A Revocable Living Trust is a document that is most lauded for allowing assets to avoid the probate process at death. However, the Revocable Living Trust is also a superior vehicle for asset management during incapacity. If the creator of a Revocable Living Trust has titled their assets to the trust and subsequently becomes incapacitated, the successor trustee named in the document can step in and manage the assets without a lengthy legal process.
Durable Financial Power of Attorney (“Financial POA”)
The Financial POA is a document that grants another person the authority to manage assets for the person who created the Financial POA (typically called the "principal"). By stating the Financial POA is “durable” it will continue in effect even if the principal becomes incapacitated and should avoid the need for a court appointed conservator or guardian. A revocable trust is typically considered a superior tool for incapacity planning, however a Financial POA should still be created for assets not owned by the revocable trust, such as retirement accounts. Much like medical directives, many states have codified template Financial POA forms since these documents are a function of state law. It is recommended that clients consult with their attorney when executing a Financial POA as requirements may vary on how to delegate certain powers to an agent.
Special Considerations for Federal Financial Benefits
- Social Security – The Social Security Administration (“SSA”) does not recognize standard Financial Power of Attorney forms in the event of incapacity. Rather, the SSA has a verification process called the “Representative Payee Program” where the SSA will vet potential caregivers to manage a participant’s Social Security payments in the event of incapacity. Due to legislation in 2018, it is now possible to proactively nominate up to three people to serve as your Representative Payee in the event of future incapacity, subject to approval by the SSA. This advance designation can be made online or by visiting your Social Security office.
- Veteran’s Monetary Benefits - The Department of Veteran’s Affairs (“VA”) does not recognize standard Financial Power of Attorney forms in the event of incapacity. Much like the SSA, the VA has a separate process called the Fiduciary Program where the VA will vet a potential caregiver for an incapacitated beneficiary.
An essential part of the planning process involves making arrangements for incapacity and knowing what documents are necessary. An experienced estate planning or elder law attorney should be consulted in this process.
1 Rajan KB, Weuve J, Barnes LL, McAninch EA, Wilson RS, Evans DA. Population estimate of people with clinical AD and mild cognitive impairment in the United States (2020-2060). Alzheimers Dement 2021;17(12):1966-75 In press
Your Personal Financial Statement
There are several ways to gauge financial health, but one of the most useful exercises is to create and maintain a personal financial statement. Much like a business's balance sheet, your personal financial statement is simply a snapshot of your assets and liabilities at a given moment.
In addition to tracking net worth and liquidity, a personal financial statement ("PFS") can also be tailored for a variety of specific purposes:
- Applying for Credit: Lenders often require some type of PFS when evaluating an application for credit
- Preparing Financial Projections: An enhanced PFS outlining assets and income sources is a good starting point for aggregating resource data that will be used in the financial planning process
- Estate Planning: Estate planning should include preparing a PFS to consider how each asset will ultimately be administered. The PFS can organize probate property and property that will pass via other means like joint ownership or beneficiary designations
Consider creating or updating your personal financial statement today.
A useful template for creating your personal financial statement can be found at the following link: Personal Financial Organizer
Connect with a TD Wealth Advisor
Our TD Wealth Advisors are available for a consultation to start planning for your future.