What To Consider When Building Your Legacy

Many folks don’t give enough thought to their legacy planning. All too often they consider the job done once they have a will in place that provides guidance as to how their affairs should be handled. But this approach can fall short of the mark, especially for purpose-driven folks who are plugged in with their families, have meaningful careers, and who want to improve the world around them....
David Roberts
October 11, 2022

What Can Your Money Do For You?

Many folks don’t give enough thought to their legacy planning. All too often they consider the job done once they have a will in place that provides guidance as to how their affairs should be handled. But this approach can fall short of the mark, especially for purpose-driven folks who are plugged in with their families, have meaningful careers, and who want to improve the world around them. For those, it will be necessary to include legacy planning in their financial plans as early as possible. That way they can make a difference in the world while they are still living, not just after they’ve gone.

Let’s discuss how you can use money as a tool to help make that happen, as well as to increase the level of joy and satisfaction in your life.

Income And Happiness

We all know that wealth provides a certain level of wellbeing. And it should come as no surprise what behavioral economists and social psychologists have concluded as they’ve sought to answer questions about how money affects our happiness:

  • We are happier when spending money on others.
  • We are more satisfied when we purchase experiences as opposed to simply increasing our stuff.
  • Higher amounts of income have a positive relationship with happiness but only up to a point.

Additional income, beyond what is needed to satisfy our essential needs, will result in an increase in our happiness. Yet after a point, the happiness money offers can be more fleeting, especially when the only goal is to be richer. The price we have to pay physically and psychologically while striving to generate additional income could very well outweigh any happiness gained. Therefore, we need to avoid seeing money simply as a thing to have and hold, but rather see it for the impact we can make if we spend according to our values and on what’s most important to us.

Money Buys Flexibility

It can buy flexibility. When spent wisely and within certain boundaries, wealth can afford you the opportunity to do what you want, when you want, and with whom you want.

  • It can buy you more time with friends and family.
  • It can allow you to quit your job and pursue your true passion.
  • It gives you freedom to do the things that bring you the most joy.

And you don’t need an immeasurable amount of wealth as long as you prioritize what truly matters to you.

Charitable Giving

Therefore, if making an impact in others’ lives and on the world is something you’ve prioritized as something that truly matters, you shouldn’t have to regret your gifts after they’ve been given. Something that helps you avoid regrets is to review any charitable gift beforehand using these criteria: connection, impact, and choice.

  • Connection is having a strong reason to give to a particular cause.
  • Impact is how your dollars will be put to use. While writing a check is pretty much universally appreciated, being a part of the process or seeing the change you are helping to create can improve your connection and increase the happiness you feel.
  • Choice is having the opportunity to decide how you are going to make the gift. For instance, if you have children, including them in the giving discussions and implementation allows you to spend more time as a family and to teach them the value of giving.

Helpful Resource

Many folks will need help developing a charitable giving strategy which allows them to align their resources with their values and legacy goals. The ‘what’, ‘when’, and ‘how’ to give away financial and property assets will be unique to each person. If you are working with a Financial Advisor, they can help identify opportunities and model outcomes which can optimize the impact of your charitable gifts.

I have a financial planning checklist you can use to help create a giving plan and to identify what assets in your overall financial picture may be in excess and available for these goals.

This checklist covers:

  • Philanthropic motivations and goals
  • Cash flow considerations
  • Asset selection when funding gifts
  • Charitable giving vehicles
  • Tax planning and deductibility

Click here to get your copy of this FREE resource

So the question remains: How will you put your money and resources to work, so you can build your legacy long before the end of your life?

Opportunities To Create Your Legacy

There are at least five distinct opportunities to build your legacy over the course of your adult life:

Opportunity #1

Your first opportunity comes every time you get an increase in income or a cut in expenses. As income grows or expenses shrink, avoid automatically increasing your spending, so you can earmark some funds to give away. Create a budget line item for your giving and stick to it. It’s encouraging to remember, especially if your giving funds are limited, that your gifts can often be compounded through company matches or matches from donors within the organization itself. Many organizations will also accept property you may want to give away, i.e. vehicles and bags of clothing.

Opportunity #2

Your second opportunity comes through inviting and involving your family and friends. Through your influence on others, you can make a bigger impact as they all come together, focusing energy and resources in a unified manner. As mentioned before, when you teach young people to commit time and money to a just and worthy cause, they will be far more likely to continue this behavior as they get older.

Opportunity #3

Your third opportunity comes when you receive a large amount of cash, i.e. you sell your business, receive an inheritance or settlement check, etc. If you can redirect some of these dollars to the cause you most care about, that may soften the impact of any tax liability, assuming you have a financial plan which considers your tax impact now and into the future. Through that lens you should be able to see how much of this windfall will be in excess of your retirement needs. Then, you’ll be able to give yourself permission to release some of the money before you are financially independent.

Opportunity #4

Your fourth opportunity comes during retirement, where you can live below your means even though you have the resources to spend more on yourself. Retirement goes through many distinct spending stages, providing opportunities throughout your retirement to fulfill your giving plan.

Opportunity #5

Your fifth opportunity comes through your final gifts, and these can be your wisest and most impactful. Given the size of your estate, there are many opportunities for multi-generational planning influenced by your beneficiaries’ needs, as well as how your estate will be taxed. As such, planning for which assets you leave to the next generation versus your legacy organizations can make a big difference on the impact you’re wanting to make.

While it’s possible that these final gifts will be your largest, if you start your giving strategy early, hitting all five legacy opportunities, these final gifts may be dwarfed by your total lifetime giving.

Final Thought

Just like your retirement saving, the best time to start your legacy plan is while you are young, and the next best time to start is right now. First identify where you would like to make your impact and let your Financial Advisor walk you through some options to make that happen, tilting the odds for success in your favor.

I would love to meet with you and discuss my checklist, “What Issues Should I Consider When Establishing My Charitable Giving Strategy?”. Establishing a legacy plan which includes a meaningful charitable giving strategy is an important step in taking control of your finances.

Click here to get your copy of this FREE resource

Using Home Equity As An Income Source For Retirement

Using Home Equity As An Income Source For Retirement

Our home is the emotional hub of our lives, going beyond the basic provision of comfort and shelter. They are where we build memories and a place which gives us nearness to family, friends, and community. Retirees will need to live where they can continue to be connected socially after leaving the workforce and children have left the home. Transportation options, quality health care, and long-term care services will also become increasingly important during the later years of life. As such, it is vital that our retirement income strategies account for where we’ll need to live, how long we should stay, and whether we’ll need to move later in retirement.

How to Make Your Cash Flow Plan Work

How to Make Your Cash Flow Plan Work

Your cash flow can be described as the way money moves into, out of, or between your financial accounts on a monthly and annual basis. A healthy financial plan will include a cash flow plan which drives your money habits into alignment with your values and goals. Most folks know this cash flow plan by the more familiar term, “budget.” It may help to think on it this way: a budget is the plan, but cash flow is the reality of what’s going on with your money.

Tax Loss Harvesting: Is It Right For You?

Tax Loss Harvesting: Is It Right For You?

Maximizing the after-tax return rate of your portfolio is an important, long-term objective which involves reducing the impact of taxes on the portfolio when possible. Tax loss harvesting helps you meet this objective by either reducing or eliminating the taxes on capital gains in a given year.

Get in Touch

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david@planforyourgoals.com

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