How to Protect Your Assets in Retirement

Written by Sally Perkins

Retirement should be a time of comfort and low stress. It is an opportunity to reward yourself with the savings and investments you have made over a lifetime. However, regardless of how careful you are, your assets could be at risk. It is therefore paramount that you put some time into securing and protecting your assets, so that you can remain comfortable, or even become more wealthy, in your final years and have a decent inheritance to pass onto your loved ones.

What Are Your Main Assets?

An asset is anything with a cash value, which can be converted into money when needed. This can be owned by both individuals and companies and includes property, savings and investments. The biggest asset for most people is any real estate or land that they own.

All personal property such as jewelry may also be a substantial asset. Beyond physical items that you own, your savings and investments which can be withdrawn as cash are also assets, which need protecting.

Why Are Your Assets at Risk?

Despite how careful you are, anyone can go into debt or be sued. If you declare bankruptcy, a creditor may be able to take money from your savings or seize your personal property.

You may also face a lawsuit which ends with the courts forcing you to pay a substantial fine. If you cannot afford to do this, they may have the legal right to take any assets which aren’t protected. This will be used to cover both the financial penalty and any court costs accrued. This can happen to anyone at any time and retirees are most at risk because they usually own substantial assets.

Where to Invest

As you reach retirement, you may be tempted to take all your money and invest it somewhere safe. For example, you may view gold as a safe investment because over the long term it is incredibly stable. Alternatively, you may choose a fixed rate savings account or bonds. These are intelligent solutions.

However, the mistake many make is to concentrate investments in a few areas. Maybe you have a savings account, a home and a few gold bullions. This could be a risky decision. In order to protect your assets, you should diversify your investments. Move your pension into several tax free savings accounts. If one becomes taxed in future, the rest is protected. Then live frugally within a low tax bracket.

Get Insured

Don’t wait to get your assets insured. This way, if a lawsuit arises, it is your insurance company and not you that will pay the costs. Your home, car and care costs are the most at risk so insure them first. Home insurance varies state by state. For instance, New Jersey homeowners insurance tends to be cheaper, while hurricane-prone Florida has much higher premiums. You should consider the cost of both the property and how much it is to ensure when moving house.

For auto insurance, don’t settle for the legal minimum. It is usually not much more expensive to get more comprehensive coverage. Long-term care costs can be reduced by buying them early, when premiums are lower. To be extra safe, umbrella coverage can be used to cover costs if your homeowner, auto or other insurance is not enough.

The right level of cover for your assets should not be an afterthought, it guarantees you are protected in most worst case scenarios.

Retirement Accounts

Rather than using a traditional savings account, switch to a dedicated retirement account. Company sponsored 401(k) plans have federal protection from lawsuits. This means that anything in a dedicated retirement account cannot be used to pay if you are sued.

However, this is not true for all retirement accounts. You can get protection for your IRA of up to $1 million, but it varies state by state. Before opening a retirement account, make sure you check the terms. If your money is not protected from bankruptcy, then look somewhere else.

Give Assets Away

There’s no need to wait until death to pass assets on to loved ones. The law says that creditors and courts can only take the assets that are in your name. Therefore, even if you are still living in a property, it is a good idea to legally transfer it to the name of a relative. If you move into a care home, then make sure your property is no longer listed as yours. You can pass this onto a relative, who can get the proper protection, so that you don’t have to worry about lawsuits as you settle into a retirement home.

Protecting assets should be done as soon as possible. Retirement is a time to enjoy the wealth you have saved over a lifetime of hard work. Diversify your savings, get comprehensive insurance and select retirement accounts which have federal and state protection. If possible, pass on assets early, so that it is protected if you are sued or become bankrupt. This way, you can settle into a comfortable and happy retirement.

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About LoveBeingRetired

Dave Bernard is a California born and raised author and blogger with an extensive 30 year career in Silicon Valley. He has written more than 300 blogs for US News & World On Retirement and his personal blog Retirement – Only the Beginning. He has authored three books: "Are you just existing and calling it a life?"; "I want to retire! Essential Considerations for the Retiree to Be"; and " Navigating the Retirement Jungle". Dave was also a contributing writer for the books 65 Things to do when you Retire (“Positive Aging – Old is the New Young”) as well as 65 Things to do when you Retire – TRAVEL (“Travel to Discover your Family Heritage”). He lives in sunny California with his wife, his Boston Terrier "Frank" and a passion for the San Jose Sharks.