One if the great benefits of working with the public is meeting and talking to new people every day. Some of the best people in the world read my articles (as the Fonz would say..."Heeeyyy!") just like you. Some come to see me in the office (the very brave) and some call and send emails. Recently one of these visits was just, well, way cool. Meet Marley... an eighty something year old lady going on 30.
Marley is a petite person, barely four foot eight. I would guess about ninety pounds dripping wet (heaven forbid we talk about a woman's weight) with a smile that lit up the room.
Our conversation quickly ran the gamut from politics (of which I usually shy away from) to the environment to living life (which I never shy away from). That's when she really revved into high gear- you never met anyone who lived and loved every minute of the day like Marley...cool just doesn't cut it.
She is the epitome of life at its best- just spectacular. The kind of person you listen to in awe, of their incredible grasp on life as few know it. Not out there- as firmly grounded as a person could be.
Eventually the conversation came around to the reason for her visit and the big question: "By living life as I do should I feel guilty spending what will be my kid's money? Should I give it to them now? CAN I give it to them now?"
This is an issue and question I am asked on a regular basis by those clients who are parents and would like to benefit their children or someone they know during their lifetime, as opposed to waiting until they go to the great beyond (I'm always looking for a more refined way to say die- it sounds so cold).
The dichotomy is the desire to help or gift while struggling with keeping up on expenses while living on a fixed income. My answer to the question as to if you should do it?
You really didn't think I would make it that easy did you? I therefore ask you a few questions - "Can you afford to? Will the gift have an affect on your lifestyle? Is eating everyday important to you?"
While I love my family and am very philanthropic at heart, gifting is a complex issue not to be taken lightly.
When contemplating a gift in your latter years, you must first do something very uncharacteristic: think of yourself first. Now before you come banging on my door and yelling at me about being narrow minded or selfish, remember that once you give a gift it is gone.
Presumably you are living on a fixed income generated by Social Security, pension, IRA distributions, investment income- you've stopped working. This means your inflows have been reduced from those of the past.
Every dollar you receive from your investments represents income generated by principal. Give a gift - reduce your principal: reduce your principal- reduce your income.
Simple math, but not so simple if the principal drops below that which is needed to generate the principal needed to support you in your current lifestyle. Am I saying not to give? Not at all - what I am saying is to think carefully before you whip out the checkbook.
As a hypothetical example, if you generate 5% in income and you give a gift of $10,000, you have reduced your annual income by $500 annually. At this stage of your life, all I ask is that you think in terms as to how the gift will affect your income and lifestyle.
I really don't have a beef with your kids- - I just ask you to think before you gift. Don't ever let anyone make you feel guilty or feel pressured to give money to anyone. It's yours and the decision is yours alone. We teach our kids to say no - don't for a minute feel you can't do the same. And Marley...if you're in the area, let's do lunch. I know a place that plates up a mean bison burger!