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This is something I have been wrestling with. It is really a personal decision, not something anyone else can solve for me. But I am curious what the thoughts are of others on this topic.
We can go two different ways with our retirement savings:
(1) Invest it safely (e.g., bonds mostly) and spend down the principal. The money should last long enough if we stick to a budget. However, there will be little left for anyone to inherit. But it is very safe for us.
(2) Invest it in such a way to preserve the principal and live off the returns. This depends highly on the stock market, which is of course fickle. We could lose a lot of money if we have another meltdown like 2000, which would impact our retirement plans, maybe in a big way, maybe not. But if we invest it well there will be a lot that our heirs get.
I realize there are variations on the two extremes above. But I am curious what others are doing who have retired.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
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I spent what could have become an inheritance prior to age 40.
During my high earning yrs, I donated a significant amount of appreciated stock into a family trust / Donor advised fund.
I only gift minimally from this, and only during yrs without any personal income to gift from. I finally got smart enough to exit a Community Foundation, and put it in Vanguard Charitable. It has grown nicely.
My kids can designate contributions for rest of their life, and pass that torch on to their heirs. Not much excess is to be expected from my meager spendable retirement funds. I will probably be designating my properties to charities as well. No sense spoiling the incentive for my kids / siblings / surviving parents / friends opportunity to make due on their own.
We aren't deliberately saving to leave money for our heirs. However, they will inherit our properties and those will provide them with cash once they are sold or they can hold onto them and use them for a permanent source of income...as we did.
I will always have a nice amount of money in long term growth stock funds because I'm not retiring with millions, and something will have to generate income. We will leave something for heirs, it's guaranteed.
It's a philosophical and personal issue what the priority should be for leaving an inheritance to one's heirs (in most cases one's children). There are so many variables, such as how the adult children are themselves faring, and thus the need or lack of need. Perhaps an adult child is disabled in some way and needs to be provided for after the parents are gone? Some folks choose to divide an inheritance between their children and their favorite charities - again, a personal and philosophical choice.
My mother, now deceased, was a child of the depression. She absolutely wanted to leave me and my sister an inheritance, although we were both O.K. and would have been fine even with no inheritance at all. In fact, we wish she had spent more on herself. When we were going through her things after her death, my sister found a pair of pantyhose with the following note attached: "Hole in toe - wear only with closed shoes". We had to laugh - that was our mother! She left us a substantial, but not huge, inheritance.
Unfortunately, most likely, we will need all our funds. Fortunately, our adult children are doing very well for themselves, and will not need our inheritance.
I would spend it all, depending on how much I had. It's still a good idea to stick to a budget smaller than the amount of you have to spend, though, because you never know if your costs will go up. You may have a sickness or injury that requires constant medical care, or you may need to go into a home, etc. So spend as if you will save some for an inheritance, but don't be afraid to spend that last amount if that's what you need to do. As a child, I'd rather not have an inheritance but have my parent's care totally paid for, then have to pitch in tons of money for their care as they're older, but then be left a somewhat meager inheritance (especially with various taxes, and whatnot - an inheritance could be more trouble than it's worth).
Take care of yourselves, first and foremost. I've told everyone not to count on a penny from us, but if there's something left, they should enjoy it. Luckily, my siblings and my wife's siblings are all doing quite well on their own. The few that aren't doing so well is because of their undoing. They're always "needy", but drive nice cars, have nice cell phones, take nice vacations, etc.
Make sure you are well taken care of--you worked hard and you owe it to YOURSELVES. You also owe it to everyone who follows you, to not be a burden on them. So in that respect, you're doing them a favor simply by not needing anything.
Really since we do not know date of our death ;its kind of hard checking out with zero left.
Very true. The difference, for me, is one of intent. Are we going to make a concerted effort to leave something for heirs and relatives or take the safe route which means they will likely get far less?
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