Planning To Live to 100

Summary:

So you eat your Wheaties and take your multi-vite and plan to live
to 100+. Just like you re-tooled your vitamin arsenal, you need to evaluate
your financial and estate planning to be consistent with your aspirations for
being a supercentenarian. 100 is the new 80!

Change Your
Investment Plan.

You have to take
a long term, practically perpetual, time horizon. It will be vital to maintain
a broad allocation of investment resources and not shift to the allocation
favoring fixed investments many seniors choose. Those cute pie charts adorning
consumer financial magazines showing a decided shift toward fixed income
investments as retirement age approaches may miss your optimally allocation by
a couple of decades. Shifting your portfolio to predominantly bonds 20 years
too soon could mean the difference between or postage stamp Mickey D’s and
Morton’s Steak House.

Constrain Your
Spending.

If you will have
to live on  your resources that
long you really need to limit spending to probably not more than 3-4% per year
of the investment base. Most folks way over estimate the portion of their
investment assets they can spend each year. Bear in mind you need to inflation
protect your spending power for lots of decades to come so the principal
balance must grow in absolute dollar terms so that your future cash withdrawals
will grow to keep abreast of inflation.

Redefine
Disability Planning.

Disability
insurance becomes irrelevant at some age and stage of your work life. But
disability planning means much more than mere insurance. Reliance on the simple
powers of attorney most people sign will be insufficient. For the long term,
consider the following modifications to a typical power of attorney: eliminate
the gift provisions, or restrict them, you’ll need your money. Provide
compensation for the agent. If someone has to manage your legal and financial
affairs for years, perhaps decades, compensation becomes critical to obtain the
help you’ll need. Name a succession of individuals younger then you to avoid
your outliving all of your agents.

Use a
Revocable Living Trust.

If you’ll be
living to 100 you’ll need the best structure to protect you, assure your
resources will be used for your benefit and to minimize the problems that could
arise. A revocable trust is a much more sophisticated and broad based document
that becomes increasingly important as you age. For someone living to 100 the
advantages of a well thought out, detailed, and funded revocable
trust increases. You can be a
trustee of  your trust along with a
bank, professional trustee or other trusted person. They can help relieve many
of the tasks you would have to perform and thereby protect you and keep you in
control over your affairs longer.

Rethink Estate
Planning.

You have to be
cautious about giving away gifts and engaging in aggressive planning as you may
need your assets to live on. Different techniques might make more sense to use.
For example, instead of giving assets to intended heirs, transfer assets to a
trust formed in one of the states that permits you to be a beneficiary of your
own trust, yet remove the assets from your estate. Examples include Delaware,
Alaska and Nevada. This way, you can engage in planning to reduce estate taxes
but still retain the ability to benefit from your assets should you need them.

Modify the
Terms of Estate Planning Techniques.

It might be
advantageous to modify the way many standard estate planning tools are used if
you anticipate considerable longevity. For example, qualified personal
residence trusts (QPRTs) should be
evaluated as potentially longer term strategies rather than the shorter
durations typically used for them. A charitable remainder trust (CRT) which
pays an annuity for life should be re-evaluated as a charitable remainder
unitrust (CRUT) for which the annuity amount is recalculated each year to
provide an inflation hedge for your annual payments. Use rolling GRATs so you
can regularly monitor your need for removing assets from your estate and put
the brakes on each year if you need to. Favor simple annual gifts over larger
transactions.

Take
Precautions When Planning at an Advanced Age.

Issues of
competency become more common when planning at an advanced age. Even if you’re
competent you should take steps to corroborate that competency at the time of
executing any trusts or other documents.