I generally don’t like the idea of retirement. It encourages people to stay in jobs that they hate and live unfulfilling lives. It makes people devote their lives to doing things they don’t like so one day they won’t have to do anything at all. They miss little league games, church pageants, and piano recitals in favor of work, so some day they can retire and spend time with their family. They neglect their health, so some day they can retire and schedule their lives around doctor’s appointments. Working for retirement is bad for the soul.
B.J. Barham sings a song called the “American Tobacco Company,” which reminds me of some of my clients. The story is set in a post-World War II tobacco factory. The chorus begins with “I work my fingers to the bone just to have a little bit of something I can call my own.” It goes on to say, “Now I sit here on a line and watch these big machines crush my hopes and dreams into Pall Malls and Lucky Strikes.” This cigarette plant can be the manufacturing facility, bank, or professional firm where you work.
I prefer to think of retirement as financial independence. I hope that you have built a career that you don’t want to retire from. But whether you have let your career crush your hopes and dreams or you can’t wait to get to work every day, you are likely to have at least one tax qualified account. It would be great if you could spend the last dollar the day before you pass away. But we don’t get to plan that. So, you must think about what will happen to it when you die.
If you name your daughter as the beneficiary of a $1M IRA, she can do with it what she wants. She can invest it, buy lottery tickets, or give it away. She can also leave it to whomever she wishes at her death. If she is married to the father of her children, she will leave it to him. You are not giving her a choice. Protecting her husband and her marriage is more important to her than doing your estate planning for you. But it’s your money. You get to decide.
If you are at peace with the idea of the money you worked your whole life for being used to buy a new boat for your son-in-law or support your son’s widow and her new husband, you don’t need to think about this further. If that causes you heartburn, then you need an estate plan that addresses all of your concerns.