INDUSTRY INSIGHT
RETIREMENT PLANNING
SPONSORED CONTENT
Most retirement planning focuses on one central question:“ Will I have enough money to last for the rest of my life?” That is certainly important, but for many successful retirees, it is only the beginning.
After someone has accumulated enough wealth to meet basic needs, maintain a desired lifestyle and prepare for healthcare expenses, another question emerges:“ What is the money beyond those needs actually for?”
That is where a spending and lifetime-gifting plan becomes valuable.
A retirement plan is designed primarily to establish financial security. It considers income, living expenses, inflation, investment returns, taxes, Social Security, pensions and healthcare costs. It may project finances through age 95 or 100 and test whether the portfolio can withstand unfavorable markets and unexpected expenses.
A spending and gifting plan has a different purpose. It helps retirees intentionally use the resources their retirement plan says they can afford to use.
Many financially successful people have spent most of their lives saving, investing and delaying gratification. Those habits helped create their financial independence. However, the discipline required to accumulate wealth can make it emotionally difficult to spend or give away that wealth – even when financial projections indicate they can comfortably do so.
This can create a retirement-planning paradox: someone may have more than enough money, yet continue living as though every dollar must be preserved for an eventual inheritance.
Andrew Carnegie offers a powerful example, especially for those of us in Pittsburgh. Carnegie believed that a wealthy person had a responsibility to use surplus wealth for the benefit of society during his or her lifetime. Although he provided for his daughter, he did not believe that passing enormous fortunes from one generation to the next was the best use of wealth.
Instead, Carnegie devoted most of his fortune to philanthropy. He funded more than 2,500 public libraries throughout the world, including many in Western Pennsylvania. His generosity also helped establish Pittsburgh institutions devoted to education, science, art and music, including the Carnegie Library of Pittsburgh, Carnegie Museums and what eventually became Carnegie Mellon University. He also supported scientific research, education and international peace efforts.
Carnegie’ s example illustrates an important distinction: wealth can become more meaningful when it is put to work during the owner’ s lifetime rather than simply accumulating into a larger estate. A person does not need Carnegie’ s fortune to apply the same principle. The scale may differ, but the opportunity to make a difference remains.
The first step is determining how much capital must remain protected. This should include the amount needed to support
the retiree’ s lifestyle for life, along with reserves for emergencies, healthcare, long-term care, taxes and poor investment markets. The analysis should use conservative assumptions and extend beyond normal life expectancy.
Once lifetime security has been addressed, the remaining assets represent potential surplus wealth. Retirees can then decide whether those resources should be used for additional personal spending, lifetime gifts, charitable giving or some combination of the three.
A spending plan does not mean spending recklessly. It means identifying expenditures that could make retirement more enjoyable or meaningful. These might include family vacations, travel, a second home, home improvements, hobbies or experiences shared with children and grandchildren. The plan should be specific, perhaps establishing an annual amount for travel, family experiences or other discretionary purposes.
Lifetime gifting deserves particular consideration. Gifts made during life allow parents and grandparents to see how their generosity benefits the people they care about. A gift might help a child purchase a home, allow a grandchild to complete an education without excessive debt, assist with starting a business or provide support when it can make a lasting difference.
In many cases, family members benefit more from financial help today than they will from receiving a larger inheritance decades from now. Lifetime gifting also creates opportunities to share experience, values and financial guidance with the next generation.
Charitable giving can be approached similarly. Donors can become personally involved with the organizations they support and witness the results of their generosity – something that is impossible when charitable intentions are carried out only through an estate.
Tax and estate-planning considerations remain important. A coordinated plan involving the financial advisor, accountant and estate-planning attorney can help determine how much to give, when to give it and which assets should be used.
Ultimately, a retirement plan answers,“ Will I be financially secure?” A spending and lifetime-gifting plan asks,“ How can I use that security to make the years ahead – and the lives of others – more meaningful?”
This Industry Insight was written by Garrett S. Hoge, CFP ®, ChFC ®, MS.
H Financial Management, is a private wealth manager based in Southpointe serving the ever-changing financial needs of his clients. Please contact Garrett at H Financial Management, 400 Southpointe Blvd., # 420, Canonsburg, PA 15317, Phone: 724.745.9406, Email: garrett @ hfinancial. net, or via the Web: hfinancialmanagement. com.
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PETERS TOWNSHIP | OCTOBER / NOVEMBER 2026 41