The idea is to allow adding a legacy goal in the build section - since this usually goes hand in hand with other long term goals such as Long Term Care. Then using this in Roth conversion and withdrawal optimization so that the overall plan (including legacy) is optimized. I suppose this might require an effective tax rate for heirs?
The Actuarial Withdrawal method already allows you to input a legacy goal. It's also a great method to maximize the enjoyment of your money while you are alive. It automatically takes market movements into account, but slowly so that a bear market doesn't immediately cut your spending to the bone.
Each year, it spends anything you marked as Essential and also any taxes due. It then calculates your allowable variable expenses based on the market and the years remaining in your plan.
The Actuarial Withdrawal method already allows you to input a legacy goal. It's also a great method to maximize the enjoyment of your money while you are alive. It automatically takes market movements into account, but slowly so that a bear market doesn't immediately cut your spending to the bone.
Each year, it spends anything you marked as Essential and also any taxes due. It then calculates your allowable variable expenses based on the market and the years remaining in your plan.
The rub is not everyone wants to use the actuarial method. We discussed the idea of adding an essential goal for legacy in the other thread. Another method would be to use the monte carlo to look for a certain probability of $x left at the end. But given how common this goal is for one's whole plan, I agree with @vrr106 that adding the legacy in the build section would be a convenience, or perhaps legacy amount might be built into more of the spending methods.
I agree it could be a useful adder to the Consumption Smoothing - Deterministic option and probably easy to program. Right now, I'm sure the program has to iterate on spending until the accounts reach zero. It's probably a pretty small programming effort to let the user enter a different target.
I think this is a great idea but suggest we add an additional switch:
- Mandatory
- Desired
For instance I have a Mandatory Legacy goal to leave $x to support a Special Needs Trust and must adjust my spending to insure this goal is met. Monte Carlo and Historical Analysis should show a failure if it is not met.
OTOH, I might like to leave $y to my daughter and I am fine if it ends up being more or less.
Thoughts?
