Experts: ?Never too early’ to plan, make important decisions [Centre Daily Times (State College, Pa.)]

March 25--Scott McKee is a lists guy, and he urges his clients to think the same way.

McKee, a financial planner with Edward Jones in Bellefonte, has lists for every circumstance a client might face when preparing for retirement.

And McKee and his colleagues said you should plan early and revisit key decisions throughout your life as you move toward those later years.

"It's never too early to start," McKee said. "A lot of times we get people coming in and saying, 'I'm going to be retiring in a few years. I need a plan.' The right answer is that you should have started planning when you started working, and chipped away at it over time."

Amos Goodall, an estate lawyer in State College, said the list of questions you should ask yourself includes:

-- When should I have a will?

-- Do I have enough in my retirement account?

-- What if I encounter health problems?

"The crucial considerations are how do they see themselves living in their declining years, and what will they need to make that happen," Goodall said.

"And most people want to make sure those decisions don't bring a burden for their survivors."

When you're a young adult ...

Don't wait. That's the message from local estate attorneys and insurance agents.

They said the key documents every adult should consider having include:

-- A will: Which deals with concerns about what happens to your property after you die.

-- A living will: Which directs decisions about your medical treatment at the end of your life.

-- A power of attorney: Which gives someone else the capacity to make decisions if you no longer can, and can involve personal finance and business decisions.

These are circumstances, Goodall reminded, that can happen to people of any age.

"Who needs a will?" Goodall said. "Young people with children. Young people with property. Yes, young people need to think about wills, too."

And they should consider having a power of attorney in place, he said.

"You never know when you're going to need one," Goodall said. "If you wait, it might be too late."

He cautioned that with a document such as a will, if you don't plan ahead the government will make your decisions for you.

"The legislature has created an estate plan for everyone in the commonwealth," he said. "If you know what it is and you're happy with it, then you don't need something else.

"Of course, I've never met someone whose will matches perfectly the state's plan. If you want to know that your assets will be disposed of in the way you want them to be disposed of, then you need to have a will."

Goodall said you don't necessarily have to work with a lawyer in writing your will. But he cautioned that laws may be different from one state to another, so there can be risks.

"This is not a do-it-yourself process," Goodall said.

"If you go to the Internet and hit something like WillsByJoe.com -- and I just made that up -- or whatever is out there, the disclaimers are very important.

"You need to be using documents and making decisions that are consistent with state law as well as taking care of your needs.

"Online documents may not meet Pennsylvania guidelines. One example would be that whether you want to have tube-feeding must be specified in a living will in Pennsylvania."

When you're building a nest egg ...

Younger adults might not be thinking about whether they'll ever confront tube-feeding and other health scenarios.

McKee said too often they aren't thinking about their long-term financial situations, either.

A list of what makes a retirement plan work includes quality investment areas, diversification and time for those investments to build interest and grow, he said.

"You ask yourself: How much do I need to live on?" McKee said. "If you figure that out and you'll have enough to get by, then it becomes a discussion of transfer-of-wealth issues. How do I get as much of this as possible to my heirs?"

Nicholas Phelps, who operates Phelps Financial Advisors of State College, said he counsels a client to look at various investment options, including an individual retirement account (IRA) or a 401(k) setup, and to consider the risks and benefits of stocks and bonds.

"As you get closer to retirement, you probably ought to have more money in bonds, which are safer and less volatile," he said.

Phelps said the recession hurt a lot of individual investors, forcing some to delay their retirement plans.

"A major market drop like that can be a disaster," he said. "To avoid surprises and to guard against the risks of the market, it's definitely important to be looking at where your money is."

And if you're thinking about life insurance, buying when you're young is best, said David Wasson, a broker with , of State College.

"The earlier you buy insurance the better off you'll be," Wasson said.

"And you definitely want to do it before you have health conditions, which can affect the cost."

Wasson said those considering life insurance will fundamentally have two options:

-- Term life, which is purchased protection to cover expenses at a set dollar value.

-- Whole life, which provides the protection and also serves as an investment that gains value.

"I would look somebody in the eye and say, 'Why do you want insurance?'" Wasson said.

"It could be for final burial expenses. You might want to leave a chunk of money to your kids. Or perhaps you want to provide protection for your business.

"For the most part, people want protection for their family in case a salary earner is no longer present in the household."

When you're approaching 50 ...

State College attorney James Rayback said if you haven't developed those key legal documents by the time your 50th birthday is on the way, you need to get busy.

"There's a bigger push now, at least in my practice, to make sure people have these kinds of documents so that they're covered," Rayback said. "Somewhere around 50, you should really start bearing down on this kind of thing.

"By the time you're 50, maybe the kids have started moving out of the house and you're moving into the next phase of your life. And, let's face it, it's the last phase of your life."

At 50, you can still make decisions that affect your retirement savings in a positive way, he said.

Rayback has a list of the questions he tells his clients they should be asking themselves when the moment they'll leave the workforce is not so far away.

He said: "What are your retirement benefits worth, and what are they going to be worth years later? What will Social Security provide?

"Once you know that, you can feel more comfortable and figure out how much more money you need otherwise."

Phelps said you should start "taking things seriously" when you get "within about 10 years of retirement."

McKee asks his clients to provide an inventory of where their investments are held.

"If they're all consolidated in a brokerage account, it's much easier," he said. "We still work with some people from the old school who don't want to have all their eggs in a single basket."

He also tells his clients to revisit their lists of beneficiaries, and to take seriously choices about who might have to make important decisions.

"Who you name as your executor or who holds your power of attorney should not be taken lightly," McKee said. "You really need someone who understands the issues surrounding your finances."

McKee listed three areas to watch when planning your retirement portfolio or insurance needs:

-- immediate day-to-day expenses.

-- longer-term expenses such as health care or living accommodations.

-- "later or never money" that will eventually go to your heirs.

"A lot of what they need to be thinking about is what it costs them today," he said, "and then factor in the understanding that the costs are only going to go up."

He said the best way to plan is to work with a variety of professionals: an estate attorney, a financial adviser and a tax preparer.

McKee said local accountants, lawyers and financial planners know each other and refer customers back and forth to make sure all questions are answered.

"It takes a team approach," he said. "They all bring their areas of expertise."

He said good planning involves time, tools and talent.

"If you're missing one of these elements," McKee said, "you should probably get help."

When you're approaching 60 ...

Even when retirement is right around the corner, Rayback said, you still have some critical decisions to make, and more checklists to create.

He said it's never as simple as saying, "This is what I own. What do you think?"

Rayback said he asks clients questions such as: "Do you want to travel a lot? Do you want to buy an RV? Do you want to stay in your own house forever? And, of course, what kinds of costs will that choice involve?"

He urges touring a nursing home or senior housing center years before you're ready to move there to "check it out" so you understand rates and amenities.

"Ask yourself, do you have enough money socked away in retirement to handle that transitional situation?" Rayback said.

He said folks approaching retirement age in Centre County have many housing opportunities to consider.

"Things have changed in the sense that we have more assisted-living facilities in the area," he said.

"Years ago, we didn't have the capability of taking care of older clients. Now, we do."

Rayback said people in the 60-plus age bracket must know whether they have long-term health coverage; and if not, whether they can afford to add it.

They should also know how much they stand to get from Social Security, and how much coverage Medicaid and Medicare might provide.

"If you're wealthy, that's the time we start talking about gifting some of your assets," he said. "And if you haven't bought that long-term care, why not?"

Rayback added: "Some people find themselves spending down assets to become eligible to receive Medicaid and go to a facility such as Centre Crest."

Phelps said the U.S. Social Security Administration's new website ( www.ssa.gov) provides considerable useful information for those nearing retirement age.

"Evaluating your Social Security options is a very important thing," Phelps said. "There are a lot of different strategies out there for when you should start taking your Social Security. A little bit of planning there could make a big difference in your income."

Rayback said approaching 60 means it's also time to again review your will, your living will and your power of attorney to make sure everything is in order.

"If you're going into a nursing home, many of them require these types of documents now," Rayback said.

Goodall wrote a book about Medicare options, and said, "It's still hard for me to make decisions for my own care."

The bottom line for all retirement-related choices, Goodall said, is planning early and reviewing your plans often.

"When you counsel folks, you really talk about their lifestyles," Goodall said.

"Everybody wants to maintain as normal a lifestyle as possible. And you want to undergo changes that interfere with that normal lifestyle as little as possible.

"You need to help them get into a position where they can manage their assets, or if they are no longer able to that they have a framework in place that will do it for them."

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