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Millennials are just getting to that point in their lives where retirement and estate planning are critical. While those born in the early 80s are right in the thick of it, the Millennials born in the 90s still have time to get ahead of the pack.
Generally, estate planning includes not only retirement planning, but also planning for death and/or incapacity. While the latter may not be something a person in their twenties or thirties wants to think about, it's time for Millennials to realize estate planning is part of #adulting. Below are some basic tips to help Millennials get started on their long-term life plans.
Online Account Planning
Sites like Google and Facebook allow you to designate a person (sometimes called a legacy) who can take over your account upon death or incapacity. While these events may seem too far off in the future, or unthinkable, your digital life is part of who you are and is something that can live on forever, if you prepared.
Create an Advanced Health Directive
An Advanced Health Directive is a document that you prepare that explains what you want to happen if you are incapacitated or unable to make medical decisions on your own. These are frequently placed in your medical file so that doctors are aware of your directives.
If you know that you want the doctor to pull the plug if you become brain dead, or if you're in a coma, then put it in writing in an Advanced Health Directive. While a spouse, significant other, sibling or best friend may know that you said one time that you wanted the plug pulled, actually going through with it will be incredibly difficult for your family, friends and loved ones even if it is in writing. Also, if you never want the plug pulled, or you don't want to be revived if your heart stops during surgery, drafting an Advanced Health Directive is the best way to ensure that you get what you want when you can't speak for yourself.
Start Saving ASAP
While retirement may be 40 years away, starting to save for retirement as soon as possible is the smartest thing you can do for your future self. With the way compound interest works, you are rewarded for saving money over long periods of time, and the rewards become much better after a few decades of interest compounding. Investopedia explains that investing $100 per month for 30 years at 7% results in $117,000, but the same investment for 40 years earns $248,000.
Make a Savings and Investment Plan
If you don't have a Roth IRA, a 401(k), or an employer secured pension plan that you can plan to retire on, or even if you do, it is important to have a plan for your savings. With current savings account interest at the major banks being essentially negligible, having an investment plan that provides for a return of at least 5% to 10% can make all the difference when it comes time to retire. Simply saving is not enough. Making sure your money is properly invested is critical, but be wary of high-risk, high return investments. Taking risks to make income is one thing, but gambling with your retirement is not a wise move.
Draft a Will and Set Your Beneficiaries
Even if you don't have significant assets, you may want to create a will to make sure your personal belongings are distributed how you want them to be after you die. Also, you can provide online and personal account information in your will so that your family can access your digital storage in the cloud or on your computer's hard drive. If you do have significant assets, then drafting a will makes deciding how your assets are distributed much simpler for your heirs and family.
If you work for a company that provides, or you have purchased, life insurance or other death benefits, make sure you have properly designated who you want to receive those benefits. While typically people select their spouse, children or parents, you can select whomever you would like.