IF YOU’RE LIKE MANY readers of this site, you’ll reach your 60s and discover one of those nice problems to have—that you’ve over-saved for retirement.
What now? For answers, check out a new book, More Than Enough: A Brief Guide to the Questions That Arise After Realizing You Have More than You Need. Author Mike Piper is the driving force behind both the Oblivious Investorwebsite and the free Open Social Securitycalculator.
His short book—it runs just 129 pages—covers topics like charitable giving, talking to your kids about their future inheritance, tax issues, getting professional help and more. Here are five insights from the book that caught my attention:
“Most likely you’ll have decent investment returns and you won’t live to age 105 in a nursing home,” Piper writes. “And so, most likely, there will be a significant sum of money left over after you… have died. In other words, ‘enough’ ultimately turns out to be ‘more than enough,’ most of the time.”
I’d been toying with opening a donor-advised fund. But after reading More Than Enough, I’m having second thoughts. One reason: They’re expensive. For instance, Fidelity Charitable, Schwab Charitable and Vanguard Charitable all charge a basic administrative fee of 0.6% of assets, with fund expenses layered on top of that. I wouldn’t tolerate such high investment costs in my own portfolio, so I’m not sure why I’d willingly incur such costs on money earmarked for charity.
If you’ve researched a charity and trust it, you shouldn’t make a restricted gift, argues Piper. “And if you don’t trust the organization to use the money wisely, don’t give to that organization in the first place!” he quips.
More Than Enough makes a compelling case that the most tax-advantaged way to donate money is with a qualified charitable distribution (QCD) from your IRA. To be sure, you must be age 70½ or older to take advantage of this provision. If you’re age 73 or older, the money disbursed this way counts toward your annual required minimum distribution and, by holding down your income, it can reduce the hit from, say, Medicare premium surcharges. But for me, Piper clinched the argument with this point: If you make a donation by, say, gifting appreciated stock, you might reduce your taxable income with the resulting hefty itemized deduction, but you also can’t make use of your standard deduction. By contrast, with a QCD, you can both reduce your income and claim the standard deduction.
Piper also makes a compelling case for giving away money during our lifetime. Why not wait until death? One argument I especially liked: “[B]y the time the parents have died, the ‘kids’ are already retired,” Piper notes. “And at that point, the inheritance has no major effect on their happiness or standard of living…. Relatively modest gifts received early in life are often more impactful than larger inheritances received later.”
I’m a big fan of Mike Piper’s stuff. Jonathan, your points are well taken. I believe that we have more than enough, and definitely plan on giving while we’re living.
I haven’t read the book, but I plan to, the ebook version is $4.99.
I realized a long time ago that I probably had more saved than I will require in my lifetime. I find it frustrating how many authors give numbers for how much you will need in retirement without saying how they calculated them. I get the feeling that many of the just combine a bunch of worst-case scenarios when it’s unlikely that one person will face all of them. (It may not be a good term to classify an unusually long life as “worst case”, however.
I’ve never been married and have no children. My only close relatives are my much-younger sister, who also probably has saved more than she will need, and an older brother who’s in assisted living and likely won’t survive much longer than I do, if at all. Therefore, I plan to leave most of my estate to charities. I would like to give them as much as possible while I’m still living but I’m still trying to decide how much is prudent.
I have almost always made my charitable donations unrestricted, for the reason mentioned in the article. One of my charities is my local Humane Society, which isn’t affiliated with any national organization. Many people donate cat litter for their shelter, but I doubt that anyone has ever made a donation specifically for toilet paper for their staff and volunteer rest rooms. Their programs extend far beyond the shelter most people associate them with. I’ve toured their facilities and am confident they will spend my bequest wisely. Their 150th anniversary is later this year.
The Red Cross is another of my charities, they often get a large amount of donations in response to disasters but are criticized when they don’t spend it all on that disaster. Many of their expenses for a disaster are spent before it even occurs. They have to buy and stockpile food, equipment, other supplies, train volunteers, and maintain a paid staff to coordinate it all.
The local United Way (Rochester NY) is also one of my charities. They vet the recipients, so I don’t have to. The United Way concept originated here during WWI and the local affiliate has the second largest endowment in the country.
I’m a big fan of Mike Piper’s stuff. Jonathan, your points are well taken. I believe that we have more than enough, and definitely plan on giving while we’re living.
I haven’t read the book, but I plan to, the ebook version is $4.99.
I realized a long time ago that I probably had more saved than I will require in my lifetime. I find it frustrating how many authors give numbers for how much you will need in retirement without saying how they calculated them. I get the feeling that many of the just combine a bunch of worst-case scenarios when it’s unlikely that one person will face all of them. (It may not be a good term to classify an unusually long life as “worst case”, however.
I’ve never been married and have no children. My only close relatives are my much-younger sister, who also probably has saved more than she will need, and an older brother who’s in assisted living and likely won’t survive much longer than I do, if at all. Therefore, I plan to leave most of my estate to charities. I would like to give them as much as possible while I’m still living but I’m still trying to decide how much is prudent.
I have almost always made my charitable donations unrestricted, for the reason mentioned in the article. One of my charities is my local Humane Society, which isn’t affiliated with any national organization. Many people donate cat litter for their shelter, but I doubt that anyone has ever made a donation specifically for toilet paper for their staff and volunteer rest rooms. Their programs extend far beyond the shelter most people associate them with. I’ve toured their facilities and am confident they will spend my bequest wisely. Their 150th anniversary is later this year.
The Red Cross is another of my charities, they often get a large amount of donations in response to disasters but are criticized when they don’t spend it all on that disaster. Many of their expenses for a disaster are spent before it even occurs. They have to buy and stockpile food, equipment, other supplies, train volunteers, and maintain a paid staff to coordinate it all.
The local United Way (Rochester NY) is also one of my charities. They vet the recipients, so I don’t have to. The United Way concept originated here during WWI and the local affiliate has the second largest endowment in the country.
Just put it on my Kindle, thanks!