legacy planning

Would You Rather… Have a Pot of Gold or Have an Orchard? 

When I was young, I pictured my retirement account as a pot of gold. It would be there at the end of the rainbow, when my career is done, to fund my retirement.

Talking with folks, it seems like the pot of gold is the type of thing lots of people think about when the subject is retirement. Whether it’s finding their “number,” amassing a big enough balance to feel “safe” enough to retire, or hitting a nice round goal like $500,000 or $1 million, the lump sum is the thing.

The challenge with thinking in lump sums is, we live our lives moment to moment, month to month. We have food to buy every week, bills to pay every month, and holidays or travel or projects to fund every year.

In other words, life happens with recurring income—not a lump sum.

A pot of gold sounds nice, but when you take gold out to do something or buy something, it’s gone: you can only spend it once. This may be why some people with substantial resources still don’t feel comfortable with the idea of hanging up their earning power. They’re stuck on discrete balances instead of ongoing flows.

Long ago I realized that what we need in retirement is an orchard, not a pot of gold. The orchard produces a fruit crop, and the crop is what meets our income needs for a year. And when it’s over, we still own the orchard! Next year, another crop. When the orchard is sustainable and can produce a fruit crop big enough to live on, we’ve become financially independent—and don’t need to sell our labor to pay our bills, anymore.

One of the best things about the orchard is that it does not matter how long you live. If the fruit crop each year is big enough, you won’t run out of resources. We tend the orchard and keep it healthy enough to supply the crop.

And when you are done with it, “you can’t take it with you” as they say, so the orchard gets passed down to people or causes you love. You don’t just leave an empty pot, where the gold used to be. Instead, the ground can be made ready—for whatever’s next.

Email us or call if you’d like to talk about turning your pot of gold into an orchard.

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Would You Rather… Have a Pot of Gold or Have an Orchard? – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228main.com/.

Looking Out for the Ones We Love
photo shows a variety of black and white and sepia-toned photos on a wooden table

We’ve had plenty of conversations recently with people in their working years. It’s reminded us of a basic fact: family dynamics and money can create a lot of angst for people of any age. The issues of aging may be about universal to the human experience, but the particulars have to be navigated family by family.

We’ve seen these topics from many angles. They are pertinent for aging couples, vital for singles. Couple dynamics usually involve one taking care of the other; when there is no “other” in the household, that support system must be found elsewhere. (Trust me on this: I’ve lived it!)

When the dynamics in a family start changing, it can feel concerning for those in the younger generation, too. The questions we’ve fielded are as varied as the families:

  • May an adult child or someone else do business on behalf of a parent who is not able to?
  • Are there sufficient resources to take care of the health needs of the parent?
  • Is there a plan to be sure assets are titled properly and headed where they should be in the event of death? How do we avoid spending unnecessary time, energy, taxes, or legal work when the time comes?
  • What are the roles of Medicare and Medicaid?
  • Should we be aware of any scams or elder abuse that could be a threat to a parent?
  • Who makes health decisions on behalf of a parent who is not able to?
  • Where is the information survivors would need to settle a parent’s affairs?

The ideal scenario is that a family goes into any major event with clarity, already: that the senior generation’s plans and intentions are already made known, that they’ve communicated their wishes regarding health care principles and the ultimate disposition of their estate. And sometimes we arrive at a big moment and need to work with what we have.

If you are concerned about a parent, an initial call can help us understand your questions, point you to resources, explain how things might work, or make plans for a meeting with the parent.

If you are a parent and would like to make sure your plans and intentions are carried out, let’s talk.

In all cases, better communication usually reduces stress. Assets are the result of years or lifetimes of work and effort. We believe that planning to make sure they do as we intend is one way to respect that work and effort.

Call or email to get a conversation started: any moment can be the right moment to start.

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Play the audio version of this post below:

This text is available at https://www.228Main.com/.

Worried about the Folks? Some Thoughts about Intergenerational Planning
photo shows a variety of black and white and sepia-toned photos on a wooden table

We’ve had plenty of conversations recently with people in their working years. It’s reminded us of a basic fact: family dynamics and money can create a lot of angst for people of any age. The issues of aging may be about universal to the human experience, but the particulars have to be navigated family by family.

We’ve seen these topics from many angles. They are pertinent for aging couples, vital for singles. Couple dynamics usually involve one taking care of the other; when there is no “other” in the household, that support system must be found elsewhere. (Trust me on this: I’ve lived it!)

When the dynamics in a family start changing, it can feel concerning for those in the younger generation, too. The questions we’ve fielded are as varied as the families:

  • May an adult child or someone else do business on behalf of a parent who is not able to?
  • Are there sufficient resources to take care of the health needs of the parent?
  • Is there a plan to be sure assets are titled properly and headed where they should be in the event of death? How do we avoid spending unnecessary time, energy, taxes, or legal work when the time comes?
  • What are the roles of Medicare and Medicaid?
  • Should we be aware of any scams or elder abuse that could be a threat to a parent?
  • Who makes health decisions on behalf of a parent who is not able to?
  • Where is the information survivors would need to settle a parent’s affairs?

The ideal scenario is that a family goes into any major event with clarity, already: that the senior generation’s plans and intentions are already made known, that they’ve communicated their wishes regarding health care principles and the ultimate disposition of their estate. And sometimes we arrive at a big moment and need to work with what we have.

If you are concerned about a parent, an initial call can help us understand your questions, point you to resources, explain how things might work, or make plans for a meeting with the parent.

If you are a parent and would like to make sure your plans and intentions are carried out, let’s talk.

In all cases, better communication usually reduces stress. Assets are the result of years or lifetimes of work and effort. We believe that planning to make sure they do as we intend is one way to respect that work and effort.

Call or email to get a conversation started: any moment can be the right moment to start.

Want content like this in your inbox each week? Leave your email here.

Play the audio version of this post below:

Worried about the Folks? Some Notes about Intergenerational Planning – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

College Savings Ideas When There’s More Than One Kiddo
photo shows graduation caps in the air against a blue sky

Some things that seem complicated can be made simple. Other things, like college funding accounts for descendants, may get more complicated over time when more than one child is involved.

Consider how disparities may develop across account balances:

  • Imagine that, upon their birth, the first child receives a one-time deposit of $1,000; the second-born receives $100 monthly from birth to age 18; the third on the way is set to receive the same deal as either of the first two. However, this third child will necessarily have less purchasing power from the same amount in contributions. Why? In the years that have passed, inflation will have done its work.
  • One-time deposits may go in at a more advantageous time to invest for one child than another.
  • Equity among children will remain a shifting target as asset values and college costs change over time.

… And all this is before we even consider the differences in children’s needs.

One approach to simplify this reality is to think of college funding as a consolidated endeavor for the group, not as individual accounts. With a 529 plan owned by grandparents or a Roth IRA earmarked for education, this can be done. (We should note: owners of 529 college savings plans may change the beneficiaries among siblings or cousins with no adverse tax consequences.)

Consider this example. If there are seven grandchildren, you can allocate 1/7 of the total college fund balance to the oldest, then 1/6 of what remains to the second-oldest, and so on as each grandchild reaches college age.

In the case 529 college savings accounts are used, transfers may be needed to set up the oldest with the proper balance. If a Roth IRA is used, a withdrawal in the proper amount can be made by the grandparent to meet education expenses, then the “paid” child is removed from the beneficiary (or contingent beneficiary) provision.

Proceeds of a gift via Roth may of course be used for purposes other than education, a house down-payment for example.

Some clients who have 529 accounts for grandchildren make adjustments from time to time among grandchildren’s accounts to reflect each child’s individual needs and to maintain a better sense of equity. Others deposit equal amounts for each grandchild and do not worry about differences that emerge later.

One general rule in college funding: the more removed the funding is from the child, the less impact it may have on college aid formulas. A 529 account owned by the child is 100% available for college expenses, but a Roth IRA balance of a grandparent or parent has little or no impact.

Clients, we talk about options and alternatives; you make decisions. If you would like to talk about strategies for your children or grandchildren, email us or call.

Prior to investing in a 529 plan, investors should consider whether the investor’s or designated beneficiary’s home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in such state’s qualified tuition program. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary. Please consult with your tax advisor before investing.

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College Funding Ideas When There’s More Than One Kiddo – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

What a Nice Problem to Have!
photo shows a pile of small American cash bills

Money isn’t just money. This is one the unspoken understandings that drives our work at 228 Main.

(Green paper folding money is actually pretty gross, when you think about it. We exchange germ-ridden linen for goods and services? It’s weird.)

For many people we know, money represents work. It’s sweat and time and livelihood.

For some, money means travel, through time and chapters of our lives.

It’s supporting children and parents and ourselves and our communities.

It moves around among us and makes new things.

However, money can be a top stressor for many Americans. We’d like to offer a little reframe: money can be a wonderful problem to have.

In recent months, fresh flows of cash have been springing up in many households as the pandemic kept us less mobile and less active. Others have discovered more flexibility after paying down debt across the last year. And those stimulus checks arrived whether we needed them or not!

We’ve been hearing from some of you about those big financial questions of life, too, as some are wondering about whether a financial legacy takes the form of an inheritance for later or gifts splashed around to children or loved ones now.

Generational wealth is a powerful tool and privilege. It also highlights the tensions we feel around money: what is the utility of money, in our lives? What can it get us and others? What can it do for us and other?

How do you best use your money? There isn’t one answer—and we certainly aren’t here to tell you your answer—but oh my, what a nice problem to have!

Clients, may your wealth bring you only the best of dilemmas. We’ll be here to try to help you along your way.

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Play the audio version of this post below:

What a Nice Problem to Have! – 228Main.com Presents: The Best of Leibman Financial Services

This text is available at https://www.228Main.com/.

Have Your Cake, Eat Your Cake
photo shows a yellow cake with rainbow sprinkles with one piece gone

They say you can’t have your cake and eat it, too. Once you eat the cake, the cake is gone. No surprise, right? 

The same thing might be said of your retirement fund. It is there for you to spend as you see fit—but once you spend it, it is gone.  

How quickly you go through your retirement savings is a much bigger decision than how quickly you go through a cake. No one can tell you what the right answer is. Your retirement lifestyle might look very different from your neighbor’s retirement lifestyle.  

Some people hope to leave as much possible in their estate to provide a legacy for children and grandchildren. Others plan on spending as much as possible to enjoy the fruits of their own labors.  

Some people might plan to save the lion’s share of their savings to offset the healthcare costs they anticipate in their later years. Others plan to spend a big chunk up front, while they still have the good health to enjoy some options. 

None of these plans are inherently superior to any of the others. It is your money, after all. For many of you, retirement savings are the sum of an entire lifetime of work, and you alone get to decide how to direct them.  

What’s our wish for you? That you navigate these choices with your eyes open to the consequences.  

So here’s one important difference between your retirement savings and a cake: when you set aside a certain amount of cake for later, you will have exactly that much cake in the future: no more, no less. When you invest your nest egg, over time it may generate extra income and potentially appreciate in value, giving you more to spend in the future.  

There are no guarantees, of course. Depending on how aggressively you invest, you risk losing some of your value. This is just another tradeoff you need to weigh in planning your retirement. 

When we make our retirement choices carefully, the consequences are never a surprise. You can have your cake. You can eat your cake. Your call. 

Clients, when you have questions about this or anything else, please call or email. Let’s talk. 

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For Those Close to Our Clients

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We believe there is an edge in playing the long game, and thinking long term. This applies to life and investing and planning, in our view.

In our work for clients, there is often a legacy aspect to it. Financially independent people tend to leave assets behind for loved ones or subsequent generations. This means that from time to time we find it necessary to work with a trustee or executor or beneficiaries or heirs of a client.

So those left behind face a lot of new things, and often need to try to gain a feel for what we are all about here at 228 Main – decide whether we are trustworthy – at the same time. Clients sometimes tell us they hope their children will listen to our counsel, and hope that we will be there to work with heirs.

Recently a client expressed these kinds of wishes, and the hope that her children would get engaged with us, and perhaps use their inheritance wisely.

This makes sense. We all want the best things to happen. Our work is not finished until we have done what we can to make the best things more likely.

Here’s an idea that can help you and us improve the odds of success in this legacy work. Provide us with the email addresses of your children, heirs, trustees, executors, and other interested parties. We will add them to our weekly email newsletter list. By reading the blogs and watching the videos, others can gain a sense for what we are about. Convenient, on their schedule, people have told us it is a great way to get acquainted.

We don’t have time to bug people on our list, and it is very simple to unsubscribe. Nobody will get unsolicited spam or phone calls as a result of being on the subscriber list.

So if you are a client wishing to acquaint others with our work, please get us names and email addresses so we can add them to the list. If you are receiving emails from us and don’t know why, this is it. Unsubscribe if you would like, you’ll get no hassle from us. We are busy trying to grow the buckets entrusted to our care.

Clients, if you would like to talk about this or anything else, please email us or call.