The Benefits of the Three-Legged Stool Approach to Estate Planning

Generations of retirees have relied on the well-known three-legged stool model of estate planning. Employee pensions, personal savings, and Social Security formed three stable legs that propped up a secure retirement plan. 

Fast forward to today, when most companies have phased out pensions and the future of Social Security isn’t looking so secure anymore. How do you keep your three-legged stool from toppling over? The legal team at Brady Cobin Law Group in Raleigh, NC, shares its wisdom. 

The Traditional Three-Legged Stool Retirement Model 

For many years, workers counted on the following three components to provide a secure retirement:

• Corporate pensions, also known as defined benefits plans
• Private savings and investments
• Social Security

However, the economic shifts near the end of the 20th century changed the game. People retiring today may enjoy lower financial security in their golden years compared to retirees a generation ago. Future retirees may find themselves in an even worse predicament. Despite their investments in education and career, millennials earn less, invest less, and accumulate less wealth. 

How Retirement Plans Changed 

Several factors caused traditional retirement plans to erode. One, the corporate pension concept has become largely obsolete. While a small part of the workforce, like teachers and government employees, still enjoys the peace of mind a guaranteed pension gives, most workers can only count on their 401(k) plans, to which an employer contributes at their own discretion. 

Two, Social Security is running out of funds at an alarming rate. In a little over a decade, retirees may no longer receive the full extent of benefits they expect today. 

Finally, with rising life expectancy, people live longer after retirement. They need more money to support themselves and cover their healthcare expenses over the years.

The New Three-Legged Approach: Preparing for Retirement in an Era of Financial Instability

All of the above leads to this conclusion: In today’s economic climate, you can only count on yourself. You must start saving for retirement as early as possible, invest wisely, and take care of your finances.

Under the contemporary three-legged estate planning model, the professionals who help you handle your assets – i.e., your financial advisor, accountant, and estate attorney – all play a part in creating a robust, flexible, and adaptable estate plan. This is how it may work:

• Your accountant handles your day-to-day and year-to-year cash flow, prepares your tax documentation, and helps you interpret your financial records.
• Your financial advisor may help you build a well-rounded investment portfolio, manage your investments, and suggest financial safety nets like health and life insurance policies. A financial advisor may answer questions like, “Should I invest in real estate to generate a rental income?”
• Your estate planning attorney may suggest legal solutions that will not only allow you to prepare for retirement but also protect your family.

Specifically, an estate planning lawyer can help you create a durable power of attorney, a legal document that allows a trusted representative to make decisions on your behalf when you are unable to do so yourself. An estate attorney can also help you set up a trust to keep assets out of your taxable estate and avoid the probate process.

Brady Cobin Law Group, PLLC: Estate Planning Professionals in North Carolina

When times change and the economy shifts, you must prepare for the future – and it’s never too early to start planning for retirement. We at Brady Cobin Law Group, PLLC, are here to help you optimize the use of your financial resources and create a comprehensive estate plan that protects your assets. Contact us today for a confidential consultation.