Calling others to share when they can

MEMBER COLUMN

by Nick Massetti

LW contributor

In retirement planning, there’s constant debate over the topic of what percentage of your portfolio you can safely spend each year. Unfortunately, no one can tell you because one household’s circumstances can be very different from another household’s, in ways that meaningfully change the answer. This much can be said however. Prudent financial planning generally dictates spending at a conservative rate from savings in retirement because you don’t know how long you will live, you don’t know whether you’ll incur major medical or long-term care costs and you don’t know what investment returns you’ll earn. But the most likely scenario is that you won’t get financially unlucky in all three of those categories. So, if you are spending at a conservative rate, there’s a high likelihood that a significant part of the portfolio will remain upon your death.

That all leads to the important question: where should any unspent money go? The most obvious answer is the kids. With more thought, one might decide on some other allocation more closely aligned with one’s values and goals. Would it really impact the kids if a somewhat smaller share were donated to charity? Tax deferred assets (such as an IRA) end up being taxed and reduced in the end. A qualified charitable distribution (QCD) counts as an required minimum distribution (RMD), is not taxable and can reduce gross income below the Medicare premium increase threshold. Among the Leisure World charities there are the Golden Age Foundation, the Emergency Information Council, the Historical Society and the newly formed Leisure World Cares Fund. Researchers have found that spending money on others can increase happiness when the giver can see the difference their gift/spending made, and when they feel a sense of social connection to the person or cause, they are helping. If you have enough, consider giving through local charities to help them help others here and now.