About Estate Planning and Retirement Planning

Two of the most important issues to deal with in life are estate and retirement planning. Retirement planning involves setting money aside either individually or through an employer that will be available when a person is no longer working. Estate planning deals with asset distribution after death.

Retirement Planning

When it comes to retirement planning, there are basically two kinds of plans. One is called a defined benefit plan. The money in this plan is provided solely by the employer and designates a specific amount of money that will be received at retirement. Depending on the company, this can be a lump sump, or it may be calculated monthly.

The other plan is called a defined contribution plan. This is when both the employer and employee contribute monetarily to the plan. Unlike the defined benefit plan, there is no guaranteed amount that will be given at retirement. The valued amount will depend on a number of variables including asset allocation, gains and losses, stock performance and any applicable fees. 

Estate Planning

Estate planning can be a daunting task, as not many wish to think about a time when life will come to an end. Although it may feel uncomfortable, decisions need to be made once a person dies and it works best if the decisions carried out were made by the deceased in advance.

One way to get started is to name a beneficiary on a life insurance policy. If an individual has a number of assets, a will is also usually drawn up. This can be done by the individual or a professional such as a lawyer, trust officer, accountant or financial planner. The will gives a detailed account of how and to whom the assets will be distributed. This includes everything from real estate to checking and savings accounts.