Urgh, this is a topic no Millennial or Gen Z wants to think about. With astronomical property prices, rapidly ageing parents, global warming, and economic crash after economic crash, we are generations who prefer to live in and enjoy our present. We know that we will likely have to work until we are physically unable to, that we will have to make a decision between owning our home or living in the city for career opportunities. Oh, and did we mention that we are kept in “entry-level jobs” for years before receiving any raises or promotions. It’s no wonder we’re out enjoying life instead of saving for a house deposit.
That being said, we do need to do a little bit of future planning. Death or incapacitation can come at any moment (cheery thought, we know!) and a safety net will reduce the stress on you or your family. If you are a parent or married, you should do comprehensive estate planning to ensure your family will be provided for in the event of your death. If you are not married or a parent, read on; here is our future planning guide for Millennials and Gen-Z.
If you are younger, you will likely have few or no assets to split and very little in the way of retirement accounts and money to split. With those student loans, most of your estate will go towards paying those off.
Your future planning will be much easier.
You may have heard this advice before, but we will say it again. You need to create an emergency fund so that you have money if something happens. A frightening amount of us live paycheck to paycheck, and we would be in serious trouble if we were not able to work for a week or two. Start putting aside money from every paycheck into a separate savings account. Aim for your emergency fund to cover 3-month expenses at the very least. However, you need to ideally have it cover a year of expenses. If you lose your job unexpectedly or need to move last minute, you will be grateful for this money. When you take money out, top it back up as soon as possible.
If you have sunk into your overdraft or accumulated credit card debt, you should aim to pay that off as quickly as possible. Not having high-interest debt will give you a lot of opportunity in life. You will improve your credit score and not have to worry about missing payments.
The earlier you start saving for retirement, the better. One of the easiest ways to save for retirement is through your company’s retirement plan. A percentage of each paycheck already goes into your retirement account, and your employer matches that percentage. Find out the maximum percentage that your employer will match and increase your contributions to that. This is the bare minimum to do to start planning for retirement. The money comes out of your paycheck before you see it, so it requires no effort on your behalf.
If you log into your retirement account, you will see that you can name a beneficiary in the event of your death. Think about who you want to receive that payment and name them. Write this down on a document with your retirement account details too.
If you have any insurance policies, you should do the same thing.
Writing a brief list of your accounts and assets with their account number and the email address on your account will make everyone’s life easier. Do not add your passwords, but having a list all in one place will make it easier for you and anyone looking for them after your death. Leave them in a folder dedicated to estate planning where they may be easily found.
Along with your list of accounts, you may need ID documents like birth certificates, important medical records, letters from your bank. Keep these all in one place. It will make your life a lot easier and will prevent people from hunting around for them.
Planning a funeral of a loved one while grieving is difficult. Your loved ones may feel lost and unsure of what you might want. Write down a brief list of what you would want and leave it in your important documents folder. Consider:
If you have anything in particular that you want to give someone to remember you by, make sure you note it. Better yet, create a will to ensure your wishes are respected.
If you are not married or in a registered partnership, then your next of kin would be parents or siblings if your parents are not alive. This is the default if you died without a will. The law will not take into account if you are estranged from a family member.
If you have a long-term partner who you want to be looked after in the event of your death or you want to leave things to someone other than your parents, you need to create a will. Even if we trust our loved ones to respect our wishes, it is very likely that they will not. Writing a will is the only way to ensure your wishes are respected and reduce the success of the default next of kin contesting beneficiaries in court.
You can purchase a will-writing kit that will make the process simple and legal. Keep your will in with the rest of your important documents. It is often smart not to alert people to the provisions of the will. Update it after every big life change (change of relationships or births and deaths in the family) or every 5 years. The most recent legal will is used in the event of death. If it is more than 5 years old, the will is more likely to be contested.