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Retirement savings - how much should you leave for your kids?

After a lifetime of hard work and saving toward your retirement, it's only natural to want to know that you will be able to live comfortably when you are no longer working – i.e. that you have saved enough.


It’s also natural to be concerned for the wellbeing of your children when you are no longer around. Leaving a legacy for your children, however, often comes second to your own post-retirement needs, provided that your retirement savings are not depleted by medical expenses or poor market performance on investments. Despite these uncertainties, it is possible to save a certain amount as an inheritance for your kids, especially if you are investing in the right assets, and monitoring your tax situation when it comes to spending and handing out of savings.

But just how much of your retirement savings should pass on to your children so to ensure their future well being, and in what form should these savings be left? We help answer these pertinent questions with some insight into the various options available to you when leaving retirement money to the kids.


In-retirement saving


How well you save for your retirement will give you an indication of how much you will be able to leave to your kids. Consider these top saving tips while in retirement.

When cashing out, or transferring, your retirement savings funds, be mindful of the tax implications. Depending on your intentions with your savings, you may wish to opt for monthly pay-outs as opposed to one lump sum or to move the funds to tax-free growing investments. This should reduce the amount you are taxed.

Opt for less risky investments such a property. One of the best, and least risky investments to spend your retirement savings on is property, especially foreign property in a stable markets such as Spain, consider for example the property for sale in Calpe along the Costa Blanca. Property offers a great return on investment and can be passed to your kids without a lot hassle. If you are looking into property for sale in Calpe, it may be worth a second look, and possibly a consultation with us at  Seanest for some sound property investment advice.




What to leave your children


When your children inherit your retirement fund, there are legal eventualities to be considered. This includes certain tax implications, especially when it comes to leaving them cash in the form of savings accounts or trusts. This can make this option less worthwhile, unless done in the form of an Individual Retirement Account (IRA), by setting up trusts, or even in assets such as property.

An IRA: You want peace of mind, knowing that your savings and your children’s future wellbeing will be well looked after, without losing a big chunk of cash to the taxman. This is why opting for an IRA, for example, means that they have the option to cash out the account or convert it to a beneficiary IRA. They won't be able to add money to an inherited IRA, but the money will grow tax-free, and can be used at a later stage in their lives.

Trusts: Among the main advantages of trusts is that they allow you to place conditions on how and when your assets are distributed after you die, they reduce estate taxes and they let you determine who and how much each named person gets.

Property: This is likely to be worth as much in monetary value as it is sentimental. Owning property, such as a holiday home, in retirement will give you a place to make memories with your family that you will be able to pass on to them, with the added benefit of a valuable asset to should they ever need the funds.

Forward planning is the cornerstone to all retirement investment and with just a little foresight you could find yourself enjoying a relaxed and happy retirement, possibly sipping sangria and enjoying the views from a pavement cafe in Calpe. If property in Calpe is on your list of considerations pay us a visit at Seanest, we’d love to show you around.


Image: CNN Money


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