Estate Planning and Retirement Considerations for Late-in-Life Parents

Estate Planning and Retirement Considerations for Late-in-Life Parents Image

Older parents are becoming more common, driven in part by changing cultural mores and surrogate motherhood. Comedian and author Steve Martin had his first child at age 67. Singer Billy Joel just welcomed his third daughter. Janet Jackson had a child at age 50.

And, it’s not just celebrities. According to the National Vital Statistics Reports, December 2015, issued by the Centers from Disease Control, there were 743 births to women aged 50 and over in 2014, up from 677 in 2013. Small numbers, but the upward trend has been steady for years, according to the report.

Later-in-life parents, whether they are celebrities or not, should be aware of these special estate planning and retirement considerations.

One of the most important functions of an estate plan is to name a guardian for your children in your will. Making this decision is all the more important for parents having children late in life. If you don’t name someone to act as guardian, the court will choose a guardian for your minor child when you die. Because the court doesn’t know your kids like you do, the person they choose may not be ideal.

In addition to naming a guardian, you may also want to set up a trust for your children so that your assets are set aside for them when they get older. If you have older children from a previous marriage or relationships, a trust may be particularly important.

A trust can be very specific about the rights your spouse will and won’t have when you die. You may want to give someone other than your spouse or partner the power to manage your property, for example, to protect it for the next generation. If you have older children, a trust could set aside funds for your younger child’s college education and then divide the remaining amount among all of your children.

Another consideration is retirement savings. In general, you should prioritize saving for your own retirement over saving for your child’s college, wedding or tour of Europe. If you run out of money to pay for your own retirement you might regret the money you spent for an extravagant wedding or trip for your child. And, when it comes to education, students can usually borrow money for college but it’s tough to borrow for retirement.

One advantage of being an older parent is that you may be more financially stable, making it easier to save in general. Also, if you are retired when your children go to college, they may qualify for more financial aid.

Older parents should make sure they have a high level of life insurance and extend term life insurance policies to last through their child’s college years.

When to take Social Security is another consideration. In certain situations, children can receive benefits on a parent’s work record if the parent is receiving benefits, too. To be eligible, the child must be:

• under age 18,
• under age 19 but still in elementary school or high school, or
• over age 18 but have become mentally or physically disabled prior to age 22.

Children generally receive an amount equal to one-half of the parent’s primary insurance amount (PIA), up to a “family maximum” benefit. You will need to calculate whether the child’s benefit makes it worthwhile to collect benefits early rather than wait to collect at your full retirement age or at age 70.

A qualified estate planning attorney can craft a plan to take care of all of these general concerns and any concerns you may have that are unique to your situation. He or she will also help you prepare for future medical costs you may have in a way that continues to protect your young children.

The bottom line is, an estate plan can help you protect your family while you enjoy your baby at any age.