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Old 08-08-2016, 07:20 PM   #21
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I love to gift .I gift my So,my daughter,my SIL,my grandsons ,my sister and my SO,s grandchildren and DIL,s.Some reciprocate some do not but it does not matter .It is what I enjoy doing especially for my daughter and grandsons .Isn't that what money is to enjoy and spend how you want to ?
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Old 08-08-2016, 07:38 PM   #22
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Structured Gifts to Demonstrate Retirement.

To demonstrate management of retirement assets, I have set up an account I'll call Demo. I retain ownership of Demo and give my intended beneficiary the right to look at it. I seeded Demo initially with a low-cost index fund (95%) and cash (5%). My gifts from this account to my intended beneficiary include part of that cash. More importantly, the cash gifts provide a continuing lesson in management of retirement assets.

Each month, I mark to market -- computing the total value of Demo. I then compute a monthly withdrawal: one four-hundredth of that total value. Doing this monthly, or twelve times a year, comes to a 3% annual withdrawal rate (12/400 = 3%). Withdrawing from the cash part of the account will not incur any income tax. I seeded it with after-tax money. The withdrawal goes to my intended beneficiary as a gift.

Once a year, the fund pays a dividend around 2%; that replenishes the cash in Demo to some extent. That dividend is taxable as income to Demo's owner. To approximate the loss due to income tax, I put only 80% of the dividend into Demo. The remaining 20% goes into an account from which I pay my income taxes.

Finally, once a year, after the 2% dividend comes in, I liquidate about 1% of Demo's fund holding, Actually, I compute the number of fund shares to sell to raise enough cash to return Demo to 5% cash. Again, to make realistic allowance for income taxes, I put only 80% of the realized capital gain into the cash component of Demo. All of the return of capital part of that sale also goes into Demo.

That's easy. There are just 14 transactions in this account annually -- monthly withdrawals and annual receipt of dividends and annual reblancing. The safe withdrawal studies that fix purchasing power of monthly withdrawal, commonly used a 4% annual rate, adjusted for inflation maybe. This disregards the effect of stock market performance. That is, a retired person may find it hard to stick to the original spending plan when the market is way down. Also, those studies assume that there is fixed interest short-term component of the retirement assets, paying decent interest, unlike today.

FIREcalc is not strictly comparable to this plan. It adjusts withdrawals to maintain purchasing power. Demo adjusts distributions according to market performance, predicting that corporate dividends grow at about the same rate (or better) as inflation over a period of years. FIREcalc concluded that the 3% withdrawal plan had no failures in a fifty-year plan.

Questions and comments are welcome.
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Old 08-08-2016, 09:13 PM   #23
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Quote:
Originally Posted by Moemg View Post
I love to gift .I gift my So,my daughter,my SIL,my grandsons ,my sister and my SO,s grandchildren and DIL,s.Some reciprocate some do not but it does not matter .It is what I enjoy doing especially for my daughter and grandsons .Isn't that what money is to enjoy and spend how you want to ?
In 2011, I helped my daughter buy her first home, and gave her the money to put 20% down. The townhome was on short sale, and she bought it at less than 40% of what the previous owner paid in 2008.

Today, the price has recovered to 80% of the previous high. This means it has doubled from what she paid.

Without my gift (my wife and I made separate gifts to double the amount allowed by the law), she would have missed out on that deal. I hope it taught her the lesson of buying when people are selling, and that one must have the cash reserve to take advantage of such occasions.
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Old 08-12-2016, 11:32 AM   #24
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Yes, we 'gift':

What? Cash
When? Birthdays and Christmas for our children. Weddings and High School/College graduations for nieces and nephews as well as our own children.
Why? Because we want to

Are your gifts reciprocated? Sometimes reciprocated, always acknowledged.

In my family, I am the youngest of 5 children. Four of us are doing well and buy what ever we want/need and we agreed long ago to not exchange gifts. The other one has a more challenging life, and we send her a gift for her birthday and Christmas as well as helping her as we can throughout the year.
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Old 08-12-2016, 11:50 AM   #25
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We do the occasional gift of wine from our cellar to friends who would appreciate--this is spur of the moment stuff and the initial purchase amounts per bottle would be less than $100 (although often some years ago). Other than that (and charity):

What? Cash/fund transfers
When? End of year some years; Also, another category is always in connection with coming together for extended family annual get-together
Why? They are 20 somethings, we are retiring soon; their marginal utility for money is quite high right now, and both we and they like having them in attendance for the annual gathering.
To Whom? our three kids (and, derivatively, to their long-time S.O.s)
Are your gifts reciprocated? Nope, at least not in kind. See "Why."

Even with no student loans and their relatively high incomes, generational arbitrage helps them a lot more than it disadvantages us, and we aren't talking huge sums of money. Same with the cost for them to attend the annual get-together. As long as they enjoy seeing grandparents/cousins and the like, it would be a shame to have monetary issues prevent it.

I suppose we should include cheap (but AFR compliant) loans for graduate school and weddings/houses in this category too? Getting 2% guaranteed or so is not bad for me, and paying it is a steal for them. Nonetheless, it is in some respects a gift, as we wouldn't do it for strangers.
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Old 08-12-2016, 01:18 PM   #26
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I GIVE, I do not GIFT.

Mostly just immediate family. Family gift to brother and another to parents. Not much individual giving at this point.
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Old 08-12-2016, 01:22 PM   #27
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I recently started to use the word gift as a verb, but after first verified that it was correct.

From the Web: The use of gift as a verb is not new, at least according to the Oxford English Dictionary, which lists examples of gift used to mean to make a present of from as early as the 17th century.
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