Leaving a Legacy: How Financial Planning Can Help
Some of our clients at TFS Advisors are charitably minded. Our team encourages people to use their finances in a way that supports the people, organizations and causes that mean a lot to them. As long as you’re weaving charitable giving, supporting family members, or spending time with the causes you’re passionate about into your financial plan, it’s an excellent way to feel connected and fulfilled.
Some people want to take charitable giving to the next level by thinking about leaving a legacy. This concept tends to be especially near and dear to the hearts of pre-retirees as they start looking at estate planning, and how they want to use their retirement savings in a way that has a positive impact on the world around them.
Let’s talk about what leaving a legacy looks like – and how you can start incorporating legacy-leaving strategies into your financial life.
What does “legacy” mean to you?
Your first step in legacy planning is to determine what a legacy looks like to you. Your idea of leaving a legacy, or having a positive impact on the world, is going to be different from the ideas of others. You might even find that your ideas differ from how your partner thinks about leaving a legacy. Having these conversations with your spouse or partner, and with other family members who may be impacted by your legacy planning, is critical.
Making sure that everyone is on the same page with how you want your savings to be used is a huge help. Additionally, talking to everyone involved can help you to brainstorm ideas, or view your legacy in new and exciting ways. Don’t be afraid to think outside the box!
How will your legacy aspirations impact your financial plan?
Leaving a legacy isn’t something that just happens organically – in order to have a financial impact, you need to plan ahead. A good first step is talking to a financial planner to confirm that, given your current retirement savings (and expected contributions to your retirement accounts in future years), you’ll be okay when you do decide to retire.
A financial planning team can help you to map out your retirement lifestyle, set a budget, estimate expenses, and project different market scenarios or life events that could impact your savings. They can also help to construct a retirement income plan, or spend-down strategy, that’s tax-efficient and helps to ensure that your expenses will always be covered.
Your advisor team will also be able to help you plan to save enough for some of the legacy-leaving activities or expenses you have in mind. They can also help you determine the logistics of giving money to family, friends, or organizations as part of your estate plan – whether that’s starting a trust, building out a will, or connecting you with an estate planning attorney who can help you with the legal side of legacy planning.
How do you save with a legacy in mind?
When you’re trying to determine how much to save in order to leave behind the type of donations, or inheritance, you want to – it can be helpful to work backward. Going back to the first question we asked – what does a legacy look like to you?
It might mean that you have trust funds set up for each of your grandkids. Maybe it means creating a scholarship fund for your alma mater. Or maybe it’s that you want a large portion of your wealth donated to charity.
Whatever your ideal legacy looks like – you can speak with a financial planning team to assign a monetary value to each piece of the puzzle. From there, you can incorporate these legacy-leaving expenses into your retirement budget, and come up with a reasonable savings goal (and a plan to work toward it) together.
Know your goals.
Just because you’re interested in leaving a legacy that lives on long after you’re gone doesn’t mean you can’t start using your money in a way that aligns with your values right now. In fact, there’s no reason you can’t have your cake and eat it, too, in this situation. Leaving a legacy doesn’t have to be something reserved for after you pass away.
You can start giving of your time, your energy, your support, and your wealth today – and you can do it in a way that still benefits you financially. From setting up and donating to a donor-advised fund, or donating appreciated stock to organizations you’re passionate about supporting – there are so many ways you can start to make a positive impact on the world around you long before your family has to execute your estate plan.
Want to know more? Contact us today. We’d be happy to talk about what part of legacy planning is exciting for you and your family and help you to put together a plan to make it happen.