Don't Create legacies...Create Comfort and Memories

pensionerstoJohn and I recognized early on together that we were building a practice that’s preponderance was filled with 60+ year olds that worked very hard to save what they had. Our clients are intelligent, trusting and loyal. And like the rest of us, they are aging. Invariably at some point in our relationship, we have the discussion about creating legacies for children and grandchildren many times at the expense of their own comfort and memories. As we have aged with our clients, we unfortunately have had to face the death of some of our clients. I would say the vast majority had sacrificed in order to leave more to children or from fear of outliving their nest eggs.

Regarding outliving of their savings, there are very few clients in these deep straits. Certainly, we have a few clients who either waited too long to save, spent money unwisely, or were forced to take IRA distributions earlier than anticipated because of job loss due to the 2008 Great Recession. Few of our clients fit this description.

Statistically, a client can be fairly assured that if they reach the age of 65, they can live an additional 20.5 years.1 We always tell our clients that they will be hard-pressed to outlive their money if they adhere to the 4% rule. The 4 percent formula is based on an allocation of 60 percent stocks and 40 percent bonds and a historical return. If you then withdraw 4% or less, there’s a 96% percent probability of leaving 100% of the original principal to whomever you desire.1

So if you adhere to this rule, we’d love to see more of you enjoy what you’ve worked so hard to obtain. Most would love to travel more. Many would like to buy a new boat or new clothes for their grandchildren. Some would like to downsize and buy exactly what they wanted in a smaller home with amenities they couldn’t afford in a larger home.

So I challenge clients now. Why not do what you can afford? Your children will be fine. There will be plenty left for kids and grandkids. However, you have limited years left. Please don’t be faced with physical ailments that hinder your abilities to travel, be mobile, and enjoy the freedoms your money can give you.

Don’t regret. You need to live for the “now” because there is less “now” left than there was yesterday. Be comfortable and create memories. The legacy can come later and be a little less than before.



1 – “How Much of Their Nest Egg Should Retirees Spend a Year?” Drew Trachtenberg. August 21, 2014.
• The opinions in this commentary express the views of the author and in no way represents the views of LPL Financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.