Put and Take vs. Put and Keep Part 2: Put and Take Accounts

Are your retirement savings going to a put and take account?

At Kemp & Associates we often meet people who like to share how they’ve saved so much towards their retirement savings account¹. A recent client told us how they saved at least $1,000 a month and had been doing so for five years successfully. I did the math quickly and determined that they should have saved $60,000. When I asked where the $60,000 was currently being held, they responded somewhat sheepishly that they only had about $4,000. I questioned them politely as to how they were able to save $60,000 but only had $4,000 and they explained that they were going in and using it for different impulse purchases and bills.

This type of retirement saving isn’t truly saving. Instead, it is a form of “put and take” or, a more modern version, would be called a “delayed spending account.”

Put and Take vs. Put and Keep Part 1: The Introduction

When you build a house, you want a strong foundation.  It is the same with your finances.  You want to ensure everything is in place so your finances will stand firm and you will be protected.  There are three important pieces to the foundation of your financial house:

1.     Updated legal documents including a will, living will and durable power of attorney.

2.    A delayed spending account, called a put and take account.  This is where you're depositing and withdrawing money for day-to-day expenses and annual expenditures.  This is where you want to practice good budgeting habits and self-discipline.

3.    Appropriate insurance coverages.  Typical insurances here are homeowner's, auto, health, disability, umbrella and term life insurance. 

Legal Considerations for Retirement Part 7: My Assets

In the previous parts of this blog series, the overarching theme has been protecting your assets. In this, the final part, of the blog series, we will answer a few more questions about your assets, namely whether your heirs will have to pay taxes on your assets and how you can protect your assets from a nursing home. With these questions answered, entering retirement is not as worrisome as it seems.

Legal Considerations for Retirement Part 6: Do I Need an Attorney?

Before retirement, you should consider many important things. In the previous part of this blog series, we discussed power of attorney. In this part of the blog series, we will discuss if you need an attorney to file for social security benefits and what to do if you’re denied.

Do I need an attorney in order to file for social security retirement benefits?

You do not need an attorney in order to file for social security retirement benefits¹, although you may find it helpful. You can file for social security benefits on your own. However, you may want to contact your financial planner when you apply for social security benefits. Although you can file on your own, the guidance of a financial planner² is often useful.

Legal Considerations for Retirement Part 5: Power of Attorney

In the previous part of this blog series, we discussed the importance of a living will. When you have a living will, you will need to give someone power of attorney. In this part of the blog series, we will discuss power of attorney and what happens if you don’t have it.

What is Power of Attorney?

Giving someone power of attorney¹ is a very important decision. Power of attorney gives another person the ability to make legal decisions on your behalf. If you become ill and incapacitated, then you may consider granting power of attorney to a spouse, adult child, sibling, parent or close friend. The person granted power of attorney has the legal right to make many important decisions including financial decisions, gifts of money, healthcare decisions and recommending a guardian for your children. Since someone granted power of attorney has the legal authority to make your financial and health decisions, you should choose someone that you trust. It is especially important to choose someone you can rely on because power of attorney is not regulated by the court system, which means it could be easy for someone to abuse this power.