By: Joey Casolaro, CFP®
For many people, retirement begins with the same question: “Do I have enough?”
But after working with many clients transitioning into retirement, we often see a different challenge emerge: they end up spending less than they expected, and leave behind far more than they ever imagined.
It makes sense when you think about it. By retirement, the mortgage may be paid off or nearly paid off. The kids are grown, college expenses are behind you, and many of the costs that defined your working years have disappeared. Social Security, pensions, and investment income may also cover a meaningful portion of your lifestyle.
That doesn’t mean retirement is inexpensive. More free time can mean more travel, hobbies, and experiences. Healthcare and long-term care can also become significant expenses later in life. But for retirees who have saved diligently and invested successfully, their portfolios may continue to grow even as they take withdrawals.
In fact, in 2022, author and financial blogger Nick Maggiulli highlighted research showing that 58% of retirees withdraw less than their investments earn, while only 14% are actually drawing down principal in a given year.
That raises an interesting question:
If you are likely to leave money behind anyway, when would that money have the greatest impact on the people you love?
The Timing of an Inheritance Matters
Imagine living into your early 90s and leaving a $2 million portfolio equally to your two children. That is an incredible gift.
But by then, your children might be in their 60s. Their mortgage may already be paid down. Their children may be finished with college. They may have accumulated substantial retirement savings of their own.
Now imagine what a portion of that inheritance could have meant 20 or 30 years earlier.
Perhaps it helped with a down payment on their first home. Maybe it allowed a grandchild to graduate from college with less debt. It could help your child start a business, stay home with a newborn, or simply give a young family more financial breathing room during some of the most expensive years of their lives.
The same dollar can have a very different impact depending on when it is received.
And there is another benefit to giving during your lifetime: you get to experience it.
You get to see the home your gift helped purchase. You can watch your grandchild graduate. You can hear what the opportunity meant to your family. Instead of your legacy being something that happens after you're gone, you get to participate in it.
But How Much Is Too Much?
There is an important balance.
Most parents and grandparents don't want to make life so financially easy that the next generation loses the motivation, independence, and work ethic that helped build the family's wealth in the first place.
That's why lifetime giving shouldn't simply mean giving away as much as possible, as early as possible.
It means being intentional.
You might help with a down payment rather than buying the entire house. You might contribute toward education rather than funding every expense. Or you might make gifts at meaningful milestones when you believe the money can create opportunity without eliminating responsibility.
The goal isn't necessarily to make the next generation's life easy. It's to use your resources to make a meaningful difference at the right time.
Your Financial Plan Can Help Answer “How Much?”
Of course, before giving money away, you need confidence that your own financial independence remains secure.
That's where financial planning becomes especially valuable.
Your advisor can model questions such as “What happens if you give $50,000 today?” What about $250,000? Could you help fund a grandchild's education? How would a gift affect your retirement income, taxes, estate plan, or ability to handle a future long-term care need?
Seeing those decisions within the context of your long-term plan can help move the conversation from “Can I afford to give this away?” to “How much can I comfortably give, and when will it have the greatest impact?”
Ultimately, the money you leave behind generally goes somewhere: to the people you love, to organizations and causes you care about, or to taxes.
A thoughtful financial and estate plan gives you greater control over that outcome.
And sometimes, the most meaningful legacy isn't the check your children receive after you're gone.
It's the opportunity you gave them while you were still here to see what they did with it.
Joey Casolaro is a CERTIFIED FINANCIAL PLANNER™ at HIGHLAND Financial Advisors, a Fee-Only fiduciary wealth advisory firm that offers comprehensive financial planning, retirement planning, and investment management. Joey graduated from the University of South Florida with a bachelor’s degree in personal finance and successfully passed the CFP national exam in 2021. Joey enjoys working out, spending time outdoors, and hanging out with family and friends in his free time.
The foregoing content reflects the opinions of Highland Financial Advisors, LLC, and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct.
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The above article was written with the assistance of artificial intelligence (AI).