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Bequeathment Alternatives
Old 08-16-2013, 08:34 AM   #1
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Bequeathment Alternatives

For those of you who have FIRED and reached 40x+, what are you doing with your resources as you age? Longevity risk and the need for keeping a 40x+ balance decreases with age. What are the alternatives to bequeathing a large estate? How do you balance the risk of outliving your resources with enjoying life and living generously?

DW and I have decided we would rather give our money away while we're alive instead of leaving a large estate. That way we get to enjoy seeing our children and charities use it for good.

I will keep working while I enjoy it, but we are setting some parameters now so I can ER when desired and we don't store too much in the barn. One issue we are concerned with is longevity risk. DW has 100+ in the family tree. I'm not so fortunate and likely will be moving on a decade before her.

The thought is that as we age, our budget will decrease and (hopefully) our portfolio will grow.

At the beginning of each age band we plan to rebalance the portfolio, create a 10 year budget, and give away any amount over the expense multiple. It's possible we may change this to 5 year segments, especially after we hit 70.

Code:
 Age Band	 Expense	   Asset Allocation		
From	To	 Multiple	Stocks	Bonds	Cash
49	59	   45	        60	  35	  5 
60	69	   40	        55	  40	  5
70	79	   35	        45 	  50	  5
80	89	   25	        40	  55	  5
90	99	   20	        30  	  65	  5
100	X	   10	        20	  75	  5
I'm interested in reading what others in a similar situation are doing. I'd also like to read some other ideas of how to balance the risk of outliving one's portfolio with enjoying life and living generously.

If we could work it out, we'd die with just enough to pay for the burial having lived a full life and seeing what we have been blessed with put to use.
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Old 08-16-2013, 09:42 AM   #2
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Understand your desire, very nobel. Please understand Medicaid 5 year lookback gifting rules. If you have decent LTC probably not an issue.

I love the idea of gifting to your children as you can, sometimes it can open their eyes on how to save.

DW and I have no children, and few choices of nieces/nephews that would need our assets. Some are FI. The ones that would need money suffer from substance abuse issues, I won't support their habits. I pray that changes in my lifetime.

So for now looks like American Cancer in memory of DW parents, Alzheimer's in memory of my mother. A no-kill animal shelter, in DW and my name. Since I have a longetivity in my family, most will be done after we are.

MRG
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Old 08-16-2013, 11:59 AM   #3
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No kids. At 65 and again at 70.5 out tax rate will move up substantially. Plus, we will be "closer to the end" so to speak. At that time, especially 70+ we will restart major funding of our DAF.
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Old 08-16-2013, 12:23 PM   #4
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I've always been fascinated by the number of posters who say they have no children in this forum. In general I find that I don't run across that many couples (heterosexual at least) that are childless, yet in this forum it seems quite common. Is the reason so many people here have reached FI due to not having children, or was not having children always part of the plan to reach FI?
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Old 08-16-2013, 12:41 PM   #5
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I understand wanting to gift to children (and grandchildren) when they are at the beginning of their career or are not high earners in order to make their life a little easier. When it comes to charities I have no big desire to have a feel good by gifting to them in retirement. My plan is to live conservatively and to have charities in my will or as benefactors. If I need the money in old age due to high medical expenses or whatever, I will have the use of my resources. If my money outlasts me, others will benefit. I get a feel good from that.

That said, I do give a small percent of what I consider my annual income to charities, I just don't get very carried away with it.
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Old 08-16-2013, 01:05 PM   #6
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Quote:
Originally Posted by Ready View Post
I've always been fascinated by the number of posters who say they have no children in this forum. In general I find that I don't run across that many couples (heterosexual at least) that are childless, yet in this forum it seems quite common. Is the reason so many people here have reached FI due to not having children, or was not having children always part of the plan to reach FI?
It is easier to reach FIRE if you are childfree. Unless the children are generating more income than expenses, they will always be a drain on one's finances. I do commend those who can FIRE who are not childfree, overcoming that huge financial hurdle.

I knew when I was 20 years old (I am 50 now) that I would be childfree. I did not realize I could FIRE until I was in my late 30s, so I can't say that my ER plan drove me to be childfree; those things happened in the opposite order. There is no way whatsoever I could have ERed if I had kids. BTW I am single.
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Old 08-16-2013, 03:11 PM   #7
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Quote:
Originally Posted by Ready View Post
I've always been fascinated by the number of posters who say they have no children in this forum. In general I find that I don't run across that many couples (heterosexual at least) that are childless, yet in this forum it seems quite common.
Wikipedia (using US Census data) estimates childless women at about 20% of population ( Childfree Childlessness )
I view 20% as quite common (and it roughly matches my acquaintances profiles)
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Old 08-16-2013, 10:43 PM   #8
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You could always look into charitable gift annuities. The San Diego Zoo has this one that I hope to give to when I'm old and have too much money: http://www.gftpln.org/Article.do?orgId=5986&articleId=424

They say there's tax benefits when you give, but you'll still have a benefit while you're alive.
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Old 08-17-2013, 12:43 AM   #9
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Originally Posted by scrabbler1 View Post
It is easier to reach FIRE if you are childfree. Unless the children are generating more income than expenses, they will always be a drain on one's finances. I do commend those who can FIRE who are not childfree, overcoming that huge financial hurdle.

I knew when I was 20 years old (I am 50 now) that I would be childfree. I did not realize I could FIRE until I was in my late 30s, so I can't say that my ER plan drove me to be childfree; those things happened in the opposite order. There is no way whatsoever I could have ERed if I had kids. BTW I am single.
Apparently it is a lot easier. Glad we stopped at two. Glad my son is stopping at 2 also. Just sent this link to him for reflection. Estimated cost to raise a child $241K. Without college! Yikes.
The Cost Of Raising A Child Today: $241,080 (INFOGRAPHIC)
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