If you’ve amassed significant savings for your retirement, it’s important to think about what you’ll do with the money. Would you prefer to spend it on yourself, give it away, or hang on to it and leave an inheritance for your children or other loved ones? Your answer will depend on a wide variety of factors, of course, but here are some points to keep in mind as you decide what to do with your nest egg.
Make sure your needs are met first
Regardless of how you want to spend your retirement savings, it’s vital to first ensure that your needs will be met as you age. Consult with a financial professional to discuss how much income you’ll need to live on, pay off your debts, and get the care you need as you age. You’ll also need to know how to handle the tax implications of retirement account withdrawals.
In an article for Investopedia, finance writer Stephanie Powers notes that you’ll also want to plan for long-term care, rising health care prices, and other medical considerations that will rise in importance as you age. In addition, consider the possibility that you could out live what you’ve saved for your retirement years — if this happens and you’re not prepared, your plans for passing on wealth could come to naught.
Consider your values and priorities
As you weigh how to spend your retirement savings, your personal values and priorities should play a key role. If giving to charity is important to you, you may want to direct your retirement dollars toward a favored organization or leave behind a legacy for a cause that’s close to your heart. Is there a trip you’ve always wanted to take or a hobby you’d like to take up? Using retirement funds for these activities could be a worthy investment in your happiness. If family is especially important to you, you may wish to leave an inheritance — or to use your resources to spend time and make memories with your loved ones right now.
Know your options for leaving an inheritance
If you decide that leaving an inheritance is the right move, it’s important to understand your many options for doing so. According to Powers, these include passing on your assets as gifts while you are still alive, creating a trust for your estate, and setting up an annuity or life insurance policy. In an article for U.S. News & World Report, finance writer Rachel Hartman also suggests possibilities like setting up college funds for your grandchildren or buying a vacation home and leaving it to your loved ones.
No matter what you choose to do, it’s especially important to consult with financial and legal professionals on inheritance matters. That way your wishes will be followed and your beneficiaries can avoid costly tax and legal complications. You’ll also want to communicate with your family members about your plans — and, as appropriate, take their wishes into account along with yours.
What you do with your retirement savings has serious implications for your lifestyle, wellbeing, and family relations as you age. Whether you’re nearing retirement or already enjoying it, set aside some time to put a plan in place and boost your peace of mind.