January 31, 2022

I have a friend who lives in another state, and for a year I’ve not been able to figure out whether she’s retired. I don’t know if it’s an ego thing, her fear of getting old, or just something she thinks is none of my business. That’s her call, but I submit there are a lot of reasons to avoid keeping your retirement a secret. It’s in your best interest to let key contacts know when you’re leaving your full-time job, even if you plan to work part-time and claim, “I’m still working.” A lot of things can happen when you leave your permanent employment, so it’s best to keep those close to you in the loop; otherwise, negative consequences can result for you or your family.

I will whisper you something granddad!

Something Bad Happens

Consider the bad things that happen in life. Say after you retire you become ill. Wouldn’t you want a trusted party to know that you’re no longer covered under your employer’s health plan? Your insurance may be through your company’s retiree health plan, COBRA, a health insurance exchange plan, or Medicare. Loved ones will need to know this information before they can help you check into the hospital, especially while the pandemic wreaks havoc with the medical care system. Further, some of your other insurance coverages may no longer apply. If you had group long-term disability (LTD), an individually owned disability income plan, or waiver-of-premium on your life insurance policy, the disability benefit likely ceases because your employment has terminated. At a minimum, let your insurance advisor know about your retirement so they can cancel disability coverage that no longer has value.

Another bad thing that can happen is you experience diminished capacity; worse yet, you may not even realize it. While employed, your employer or co-workers may be able to spot your cognitive decline and help find assistance. If you retire and don’t keep close contacts, you may slip into decline and have no one to identify your loss or to help you. Unwittingly, you may set yourself up for elder abuse. Even if you’ve taken steps to cover this contingency with a financial power of attorney or with a successor trustee named in your living trust, someone needs to know you’ve lost competency before these documents will be of any use. 

Worst of all, what happens when you die? While employed, your company can be helpful in guiding beneficiaries with some of the legal issues that arise at death. Once you’ve left work, you’re on your own. Letting a trusted party know your employment status may help avoid chaos and confusion when you die. 

Staying in Touch

Successful people often associate their identities with their jobs. They may view retirement as banishment to a world of insignificance, and part of their fear is loss of contacts. This is yet another reason to avoid keeping secrets about your retirement. Think of this transition as analogous to moving from LinkedIn to Facebook. You will still have friends, but your contact system may change. How you announce your retirement is unique to you, but assuming you want people to still be able to find you, it should be part of your retirement plan to let them know how to find you. The days are long gone when someone who wants to contact you just pulls out the white pages of a phonebook.

Some retirees have retained their work email addresses while others have sent out blanket announcements to work friends, providing them with new contact information. A not uncommon transition is to link work-based social media to personal social media; again, the idea of moving from LinkedIn to Facebook. And let’s not forget the value of seeing people in addition to writing people. Whether creating a personal Zoom account, purchasing a Portal, or simply using phone apps such as Facetime - let your friends know how they can use technology to see your smiling face.

Documents in Retirement

Once you leave your employer, you have a new job - you are now president of your own retirement plan. Part of your new job is to manage your vital papers so that you don’t become anonymous. For many, this may involve a time-consuming set of steps, so, it’s good to get started early.

Retirement often leads to creating or amending financial documents. You may be setting up financial and medical powers of attorney, creating a living trust, designating a Representative Payee for Social Security, and starting to file quarterly tax estimates with the IRS. Trusted advisors will need to know where this documentation is located and how to access it. Physical locations of documents may be an issue, particularly if retirement also involves changing residence. You may need to locate documents in a personal safe or safety deposit box, and make sure loved ones have access to your combination and/or key. Without an employer in the picture, some of the documents you traditionally kept at work – particularly benefits statements – need to have a new home. And if retirement translates into significant travel for you, letting trusted parties know where to find these documents is all the more important.

A potentially even more pressing issue is your digital footprint. Planning should include a Retirement Digital Plan. If you are physically or mentally unable to speak for yourself, family and advisors need to know how to retrieve your electronic records. This may include setting up a digital vault, designating a legacy contact for your social media, providing information on how to access your passwords, and creating a digital power of attorney. Add to the mix the products that come from blockchain technology; if you own cryptocurrency, you’ll need to decide whether to maintain your information in so-called hot storage (i.e. an online digital wallet) or cold storage (offline). The same issues apply to any purchases you’ve made of non-fungible tokens (NFTs). If no one knows you have these digital assets, the assets risk disappearing into the ether.  

Who You Going to Call?

Privacy and confidentiality don’t have to be sacrificed for the sake of handling the details of retirement. It’s just that someone or something needs to know about your situation; and someone or something needs to know about your stuff. Maybe it’s your professional advisors, maybe it’s your kids, or maybe it’s a trustee. In reality, it should probably be a mix. Your attorney can know about your estate while your financial advisor knows about your investments. Be careful, though, that in your quest for secrecy you don’t derail your own plan. Your financial plan will work much more efficiently if all your advisors (attorney, CPA, insurance, investment, banking) know your plan. Perhaps some of the specific information can be siloed among advisors, but you need to make sure your advisors collectively have the information they need to work as a team.

The same issue applies to family and loved ones. Adding a child to a bank account without notifying that child can cause tax headaches and family misunderstandings. Appointing a loved one as executor or guardian, without first getting their agreement, risks your plan failing just when you’ve become unable to fix your own mess. It’s your life and your assets – figure out who you trust with what information, and proactively let the parties know. 

Some Secrets are OK 

In a world where people are increasingly worried about their privacy, we all wonder if we can continue to have secrets. The simple answer is yes, but you may need to take preemptive steps to guarantee your information stays with you and your trusted parties. A traditional example is using a trust to avoid having dirty laundry aired in a probate court. There are modern-day extensions of this idea. Many states are increasingly willing to allow “silent” or “quiet” trusts. These trusts help the grantor of a trust avoid having a future beneficiary be aware of the specifics of the trust. The trustee knows and the taxing authorities know; but it remains a silent topic relative to the trust beneficiary.

Other retirees who are worried about secrecy are avoiding the use of trusts and opting instead for locating assets in business entities, such as family limited partnerships and LLCs. These entities aren’t just vehicles for asset protection and probate avoidance; they are also a way of keeping prying eyes from learning about the underlying assets.  

Finally, the act of retirement offers you a chance to take some of your activities off-line. You may have paid off your mortgage and no longer need access to credit. This would be a good opportunity to remove yourself from credit bureau reporting. It’s one less group of databases that have your personal info. And with retirement you may no longer need to market yourself to the larger public audience. Accordingly, it may be time to shrink your social media presence. Become more of a watcher than a participant. What’s known as “lurking” – being a member of a social media platform without actively partaking – is very common among retirees. A counterintuitive means of increasing privacy is to have more than one email account. Retirement offers you more time, and you might use that time to separate the people and groups you interact with into distinct email accounts. You can use this approach to better control who knows what about you and your activities.