Why You Need Financial and Estate Planning

Collaborating with Financial Planners: The Key to Successful Retirement Planning for Gen-X and Millennials

Retirement is one of those milestones we all think about but rarely feel fully prepared for, especially among Gen-Xers and Millennials. You’re juggling responsibilities—raising children, advancing your career, and even caring for aging parents. Amidst all these demands, retirement planning may often take a back seat, yet it’s crucial. As you navigate your unique financial situations, collaborating with a financial planner can significantly enhance your retirement strategy. Learn more about why you need financial and estate planning.

For Gen-X (born 1965–1980) and Millennials (born 1981–1996), who face distinct economic challenges and opportunities, integrating estate planning with financial planning ensures a more comprehensive approach to securing your financial future. Here’s why and how these generations can benefit from a joint effort between estate planners and financial planners.

Why You Need a Financial Planner

According to a 2023 report by the Federal Reserve, only 44% of Millennials feel they are on track with their retirement savings, compared to 55% of Gen-Xers Federal Reserve. With inflation, rising healthcare costs, and the ever-changing nature of employment (hello, gig economy!), planning for retirement can feel overwhelming. A financial planner can serve as your guide through this maze, helping you set clear, achievable goals based on your current income, debts, lifestyle, and future aspirations.

For Millennials, many of whom are in their peak earning years, collaborating with a financial planner can offer targeted strategies for building wealth, from maximizing employer-matching contributions in 401(k) plans to diversifying investment portfolios. Millennials are predicted to inherit over $68 trillion by 2030 as Baby Boomers transfer wealth which adds another layer of complexity that a financial advisor can help you navigate.

Gen-Xers, meanwhile, are often “sandwiched” between financially supporting both aging parents and children still in the home. According to the Pew Research Center, 47% of Gen-Xers fall into the “sandwich generation,” which makes retirement planning even more vital, as you may face competing financial priorities. A financial planner can assist with budgeting for both long-term care for your parents and your own retirement, ensuring your nest egg grows while fulfilling immediate family obligations.

Why You Need an Estate Planner

An estate planner, like myself, does more than draft wills and trusts. We work hand in hand with financial planners to ensure your assets are structured in a way that not only supports you in retirement but also takes care of your loved ones after you're gone. According to Caring.com’s 2023 survey, only 34% of Americans have a will or any form of estate planning document, and these numbers are even lower among younger generations.

For Millennials and Gen-Xers, estate planning isn’t just about passing wealth to the next generation. It’s about protecting your family today. If you have minor children, guardianship and trusts are critical pieces of your financial puzzle. Should anything happen to you, you’ll want to ensure your children are taken care of, both financially and personally. Estate planning also helps you take advantage of tax-saving strategies that a financial planner can integrate into your overall wealth-building plan.

The Power of Collaboration: Why Estate Planning and Financial Planning Go Hand-in-Hand

A comprehensive retirement plan needs both an estate planner and a financial planner, and here’s why: Financial planners focus on growing your wealth and ensuring you can live comfortably during your retirement, while estate planners focus on what happens to your wealth after you’re gone and how to protect it from unnecessary taxes and expenses. When these two professionals work together, they can create a seamless financial strategy that addresses all aspects of your life, from day-to-day budgeting to long-term care, taxes, and legacy building.

Let’s break down some specific areas where collaboration can benefit both Millennials and Gen-Xers:

1. Investment Strategy Meets Estate Protection

A financial planner will help you grow your wealth, but you also need to ensure that your investment strategy aligns with your estate goals. For instance, if you plan to leave a significant portion of your wealth to charity, or if you want to provide for future generations through a trust, an estate planner can draft the necessary legal documents to ensure your assets are protected and transferred efficiently.

2. Tax Efficiency

Retirement accounts, like IRAs or 401(k)s, can offer tax benefits during your lifetime, but without proper estate planning, your heirs may be hit with significant taxes. Financial planners and estate planners can work together to minimize tax liabilities, ensuring you maximize your savings and pass on more wealth to your loved ones.

According to the IRS, estates exceeding $13,610,000 are subject to federal estate taxes in 2024. While that may seem like a high threshold, keep in mind that state taxes and other fees can still chip away at your legacy. Proper estate planning, when aligned with a smart financial strategy, can reduce the taxes your heirs will have to pay.

3. Long-Term Care Planning

As Gen-Xers inch closer to retirement, long-term care planning becomes increasingly essential. The U.S. Department of Health and Human Services estimates that 70% of individuals over the age of 65 will need some form of long-term care, which can be a significant financial burden. Estate planners and financial planners can create strategies that incorporate long-term care insurance, Medicaid planning, and other mechanisms to protect your assets while ensuring you get the care you need.

Millennials, on the other hand, can benefit from thinking ahead and incorporating long-term care planning early, which can be a huge advantage as insurance costs rise with age.

4. Emergency Planning and Legacy Building

Unexpected life events can derail even the best-laid financial plans. Having an emergency fund is essential, but estate planning offers another layer of protection, ensuring that, in the event of an untimely death or disability, your family is financially secure. Studies show that Millennials are far more likely than previous generations to experience career disruption due to economic downturns, making emergency and estate planning crucial Pew Research.

Furthermore, many Millennials are concerned with leaving a legacy, whether through charitable giving or ensuring their families are taken care of. Estate planning allows you to build a lasting legacy that reflects your values and priorities, while your financial planner ensures that you’re optimizing your assets to support that legacy.

Real-Life Example: How Collaboration Works in Action

Let’s say you're a 45-year-old woman with two teenage kids and aging parents who may need long-term care soon. You have a 401(k), some savings, and a modest investment portfolio. Your financial planner might focus on building your wealth through diversified investments, while your estate planner would work to ensure that your assets are protected from unnecessary taxes and that your children are cared for if anything happens to you. Together, these professionals can help you establish a trust, incorporate long-term care planning, and ensure you’re on track for a comfortable retirement—all while minimizing your tax burden.

If you’re a 35-year-old man, you might be in the midst of paying down student loans, buying your first home, or starting a family. A financial planner can help you manage these expenses while saving for retirement, and your estate planner can draft a will, set up guardianship for your children, and ensure your family’s financial security.

Taking the Next Step

Collaborating with both a financial planner and an estate planner is not a luxury reserved for the wealthy—it’s a strategic move that can benefit anyone, especially those in Gen-X and Millennial age brackets. Whether you’re in the early stages of your career or nearing retirement, having a team of experts to guide you through your financial journey will provide peace of mind and set you up for long-term success.

In today’s complex financial world, going it alone is risky. By partnering with a financial planner to grow and manage your wealth and an estate planner to protect that wealth and your family’s future, you’ll ensure a well-rounded and secure plan for the rest of your life and beyond.

Conclusion

As you navigate your career, family, and other financial obligations, keep in mind that retirement planning is not a one-size-fits-all solution. Working with both a financial planner and an estate planner can make all the difference, allowing you to develop a personalized, comprehensive strategy that adapts to your unique circumstances and goals.

Don’t wait until retirement is knocking on your door. Start collaborating now to take control of your financial future.

Contact Us

If you are ready to start working on your own estate plan, we are here to help. Contact us today! Curious about how to get started? Schedule a 15 minute discovery call with us.