As people move into their 50s and 60s, priorities change. The hours spent on home improvements and the sheer time necessary to maintain a full-sized home seem to be a little more of a burden. As kids move on, there’s all that unneeded space.

Men and women tend to turn on the gas in the last 15-20 years of their working lives to make sure their retirement savings will be adequate to their needs. That’s why the idea of downsizing is a good one to start early. It’s also a good time for a financial check-up as well.

A CERTIFIED FINANCIAL PLANNER™ professional may not be able to help you sort out what dishes and furniture to sell or give away, but he or she would make a good first stop in developing a complete downsizing strategy involving assets, investments, career and overall financial lifestyle planning. With life expectancies lengthening, many people 50-55 years of age could conceivably be at only the midpoint of their lives.

What is the chief advantage to downsizing? Handled correctly, it can save a lot of money. Selling a larger home – possibly one that still has a mortgage – in favor of a smaller house or condo that’s completely paid off can save potentially tens of thousands of dollars in interest payments over time while still building equity. The earlier the process starts, the better.

Here’s a checklist of considerations in downsizing your life:

Get advice first: As mentioned, downsizing should be a holistic process, a chance for a check-up of your overall finances while identifying things, expenses and habits in your life that you can jettison. A CFP^® professional can give you a push by asking important questions that will get you to a better place financially. It’s helpful to set up a plan to extinguish debt in all of its forms and move on to a check-up of savings, investments and estate matters.

Downsize potential health issues: No matter what the final effect of health reform on pocketbook issues, your out-of-pocket and premium-based health costs over time will be cheaper if you take steps to better maintain your health. Make weight and other personal health maintenance issues a new priority as you move into your pre-retirement years.

Plan for a retire-career: You might be working for a company or organization that has a mandatory retirement age or you have a year in mind when it might finally be time to pack up and go. And there’s nothing wrong with a retirement devoted to travel and leisure activities. But if you think you won’t be able to afford to quit working completely or if doing nothing will eventually drive you nuts, consider getting some career counseling, personality testing and do some research now that will help you train for a new full- or part-time career for after you retire from your present job.

Start thinking about real estate and new places to live: Today’s retirees don’t necessarily have to move to predictable retirement destinations. Telecommuting allows many people to continue working lives and education from anywhere. For many people, the magic combination might involve cheaper real estate, desired weather and activities, travel options and access to good doctors and quality health care facilities. Decide what kind of home you could see yourself living comfortably in at age 70 or 80. This combination of factors might happen in a surprisingly large number of places based on individual preference. To get you thinking and hone your expectations, start with resources like U.S. News & World Report’s online “Best Places to Retire” selection tools.

Talk to your family: It’s really important to discuss not only your expectations for later in life with your family members, but it’s important to get their feedback on what they consider good ideas for you. There may come a day when you need to rely on others for help, and it would be a good idea to identify how realistic that is. Also, if you’re talking about downsizing certain assets or property that might have been in your family a long time, it’s important to discuss that with others who might be affected by that decision.

Start weeding: Physical downsizing isn’t something that’s done in a month. Give yourself a year to go through each room in your home and prioritize what you’re really going to need if you move to a smaller place. Make a list of what you hope to give to friends and family members and what you’ll donate or trash. Time will give you more opportunities to put good, usable items in the hands of people who could really use them. Develop a recordkeeping system that fits you so you won’t forget any decisions you’ve made along the way. Also, you might want to set up a separate area for family photos and other keepsakes that have high emotional value and set up a hopefully egalitarian system for who will get what either when you move or when you die.

Don’t start upsizing later: When you do move, chances are you will need to invest in some new household items or possibly furniture to match new surroundings. Try to avoid going overboard with this – that’s why thoughtful downsizing should prevent a lot of spending for stuff you’ve already chucked. Oh, and make a permanent life decision if possible not to start re-using credit cards or mortgage debt if you can possibly avoid it in your later years.

March  2010 — This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Martin V. Higgins, CFP, CLU, AEP, a local member of FPA.

By Mark Colgan, CFP

By definition taxes are a fee charged by the government on a product, income, or activity to support public prosperity. This is assuming you are talking about monetary taxes. There is, however, an even heavier burden people often contend with. It is the devastation of personal legacy taxes. By definition personal legacy taxes are the negative consequences survivors face as a result of an individual dying without having properly documented her/her values, life lessons, memories and final wishes. If you have ever experienced the loss of a loved one you would likely agree that the absence of this vital information is emotionally taxing.

Before I expand on my concept of personal legacy planning, let me first let me clarify that I am not talking about common estate planning. As you know, estate planning traditionally addresses your material assets and possessions of financial value, and your wishes for how they will be disbursed in the event you should pass away or cannot communicate for yourself. Estate planning is accomplished with tools such as a legal will, trusts, powers of attorney, health care proxies, etc.

Your true wealth, however, is not measured in just dollars and material assets ― and that is where legacy planning comes in. Personal legacy planning addresses your non-material assets, possessions of emotional value. This includes your values, life lessons, memories, and final wishes ― information that is too valuable to risk being lost. It is a perfect complement to your estate plan.

Let’s get more specific. A couple of years ago Bob, a client of mine, called and told me that he had terminal cancer. He wanted to proactively document everything he could think of (both personal and practical) that would be beneficial to his wife. He had already taken care of his estate plan and made sure she was okay financially ― but he was more concerned about her emotional well-being and her ability to move forward after he died.

When I told him about our legacy planning solution, he was relieved. He was able to document practical information about things such as his funeral arrangements, maintaining the household, his plans for the kids, and the location of important documents. He was also delighted to share important personal messages such as thoughts about how and why he loved his wife, favorite memories about their family vacations to Florida, his views on religion, and other philosophical thoughts that he felt could positively impact future generations. The legacy planning process helped Bob gain clarity and confidence that everything that mattered to him would be passed on to those he loved.

Imagine the peace of mind Bob had, knowing that instead of a tangled web of unanswered questions, his loved ones would have all the information they would need and long for.

The absence of a carefully planned legacy leaves loved ones with an impending tax that will burden their soul. Recently, I had a heartfelt discussion on this topic with a professional acquaintance of mine Russell Friedman. Russell is the Executive Director of The Grief Recovery Institute frequently cited grief expert and author of several books related to grief recovery. According to Russell, “Grief is difficult enough without complications, but having interacted with thousands of grievers, I have learned that the absence of a carefully planned legacy leaves them with financial and emotional distress which compounds their grief

exponentially. The real tragedy here, beyond the loss of a loved one, is that these issues are totally avoidable. All you need to do is take the time and energy to prepare a well thought‐out legacy plan.”

Don’t let your fear stop you from doing what you need to do. Here’s what happens if you don’t plan your legacy.

1) Those you leave behind, when burdened by financial challenges and unanswered questions, will often bury their grief in an attempt to survive.

2) Distracted from their natural need to deal with their grief, the grief stays hidden, and since time can’t heal emotional wounds, it gets worse, not better.

3) The loved ones you leave behind won’t know how you really felt about them – I know, you tell them every day, but it is not the same thing.

4) Your loved ones won’t know where to find the vital documents they need to carry out your wishes – you’ll unintentionally leave behind a mess.

5) It can potentially cause incredible rifts between family members leaving emotional holes that can never be filled.

6) You won’t have the opportunity to have these discussions now, while you are still able to see what a powerful impact they can have on the people you love the most.

7) Your legacy will die with you. Your great-grandchildren and other future descendents will only have empty photographs and presumptions about who you were.

Don’t leave your loved ones with a legacy of pain because you didn’t take the time to put together your legacy plan. And don’t put it off because you are young, in good health or have a crazy schedule. It doesn’t matter how old you are, or how healthy you are. Every day the news is filled with tragic stories of young and healthy people whose lives ended suddenly. And while we would all like to believe “it will never happen to me,” the only way to ensure your loved ones are protected is to act now and plan your legacy.