How Much is Enough?
Residents and prospective residents of a continuing care retirement community (CCRC) are typically those who have already experienced some measure of financial success. Unless your personal assets are entirely the result of a generous inheritance, you probably have a track record of spending less than you make, avoiding debt, saving for emergencies and future purchases and investing long term. Now in your retirement years, the question is: How much of my accumulated wealth is enough?
Our son retired at the ripe old age of 50 (proving to me once again that life is not fair!), but while he is a bit of an “outlier” in that respect, people are retiring earlier, then living longer than in times past. While living longer is generally a result to be celebrated, it also poses some challenges from a financial point of view.
In an affluent society there is a moral (some would say even spiritual) dilemma of how much of this affluence needs to be kept for oneself, and what might be available for the benefit of others. The people of this great nation have always been known for their generosity, when compared with almost any other developed country. While it has been said that behind every fortune lies a great crime, I find that statement to be a bit cynical. After all, we owe much of our public library system to the Carnegies, and who but Bill Gates would take on projects as ambitious as eradicating diseases in Africa?
While few of us have the resources of the Carnegies and Gates, there seems to be a spirit of giving inculcated into our very being, and most people who have been blessed financially have a genuine desire to share with others. We all know some exceptions to that rule, but often I find people who really want to give generously, but are fearful that if they give to others in need or causes about which they care deeply, their remaining wealth will be insufficient to sustain them through their (hopefully) long lives.
Enter the CERTIFIED FINANCIAL PLANNER™ (CFP®), riding (metaphorically speaking) to the rescue. Actually, it’s not that simple; even an experienced CFP® has no more ability to foretell the future than you do. But these professionals can help with financial projections, based upon reasonable assumptions about the future, and arrive at a general conclusion about just how much is “enough.” This knowledge can be amazingly liberating for those anxious about their giving intentions. There are also some valuable tools that can be used to “hedge your bets” while sharing your wealth.
As a general rule, CCRC residents are a dream to a CFP®! A major portion of the resident’s cost of living is covered by the monthly CCRC fee, and the remaining expenses are typically more discretionary in nature, so the ability to forecast future cash flow needs is greatly enhanced. But the biggest forecasting advantage for the CCRC resident is that a major area of financial risk faced by seniors—financing the cost of long term care—is covered by the CCRC! If your CFP® doesn’t have to factor in that huge contingency, the range of possible financial forecast outcomes is narrowed considerably, and you are much more likely to know the answer to that nagging “How much is enough” question.
Once you have an answer to that question you can start using the many planning tools for creative giving, and one of the best is the Charitable Gift Annuity. This is a real life example of “having your cake and eating it, too!” You can give a gift to your favorite qualified charity (your very own CCRC may qualify), and receive a fixed payout on that gift amount for the rest of your life. You get an initial tax deduction for charitable giving, and the payout rate paid to you is based upon your age (older is better!).
So the “bottom line” is: You really can experience the “joy of generous giving” and still have the expectation that your financial future is relatively secure. Another amazing benefit of CCRC living!
Emerson Hartzler, MBA, is a Lakeview Village resident, and, though he lives in a retirement community, he continues working as a financial advisor for Triune Financial Partners, LLC, at Lighton Plaza, 7300 College Blvd., in Overland Park, Kan. Reach Triune at 913-825-6100.