No Heirs? Here Are 4 Ways to Spend Your Nest Egg Guilt-Free and Protect Yourself
Not planning your life around legacy? You're not alone. Why a growing wave of single and child-free retirees is unapologetically putting their own needs first.
Pam Krueger isn’t amassing a small fortune just to hand it over. While she plans to bequeath a gift to her beloved niece and nephew, the CEO is unapologetically putting her own needs first—planning her life around travel rather than a traditional legacy.
“I want to be able to rent a place for two or three months in Italy and Greece every year,” says Krueger, founder of the adviser-matching platform Wealthramp. “Why should I be ashamed to say I worked hard? I’m not planning my life around legacy.”
Krueger is part of a growing wave of solo agers. Without children to rely on for future care, she’s fortified her retirement savings to self-fund the what-ifs of aging.
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She isn't alone. Zach Ungerott, senior wealth adviser at Hightower Wealth Advisors, says more clients than ever are wondering: If I don’t have heirs, what should I do with my estate?
“It becomes a value discussion. Do they want to give money to a niece, cousin, or do they want a large amount of the estate to go to charities?” says Ungerott. Do they want to leave nothing behind, spending down their entire nest egg?
Solo Aging: Why You Must Plan for the ‘What Ifs’ First
Deciding which way to go can be difficult, but Krueger argues that for solo agers, estate planning must come from a place of financial strength.
In her retirement, she envisions traveling the world, staying in luxurious hotels and enjoying high-end amenities. She’s also not frivolous. She has a dedicated plan for the "what-ifs."
That’s particularly important, given the high price for healthcare in retirement. A 65-year-old can expect to spend $172,500 in out-of-pocket health care expenses, according to Fidelity Investments' annual forecast. That doesn't include unforeseen emergencies or stints in a long-term care facility.
“If you don’t have heirs, it probably means you don’t have anyone to rely on for long-term care. What if you go into memory care? You have to figure out how you're going to cover the what-ifs,” she says. “Once long-term care is set up, you can use your money guilt-free.”
Who Will Speak For You?
But funding your healthcare is only half the battle; you also have to decide who will speak for you when you can't. After all, you don't have children or a spouse who will automatically be designated your proxy or power of attorney for your health care and financial decisions. It requires a different strategy.
If you don't have a spouse or adult child, a solo ager alternative for a power of attorney can include the following:
-A trusted friend or family member who can make the tough calls for you.
-A professional fiduciary that you pay to act as your agent.
The Guilt-Free Phase: Designing Your Heir-Free Estate Plan
Whether you want to leave your money to charities, give to loved ones, put your money to work while you are living or spend it, here’s a look at how you can make it happen.
1. Empower your chosen family
Best for: Friends, nieces, nephews or non-family members.
How it works: Use a will to lay out asset distribution, or a revocable living trust to maintain control of your assets while you are alive. For life insurance policies, bank accounts and retirement savings plans, name your friend or family member as a beneficiary directly with the financial institutions.
2. Launching your own giving fund
Best for: Leaving a long-term charitable legacy.
How it works: Utilize a donor-advised fund (DAF). You can fund it with cash, stocks, fine art or crypto, claim an immediate tax deduction, and have a say in how the assets are invested and donated after your death.
3. Give While Living
Best for: Seeing the real-world impact of your wealth today.
How it works: Transfer stocks or cash directly to qualifying organizations or charities to deduct up to 30% to 60% of your Adjusted Gross Income (AGI). If you are 70½ or older, you can utilize Qualified Charitable Distributions (QCDs) to make tax-free donations directly from your IRA.
4. Die With Zero
Best for: Maximizing your personal lifestyle and spending your hard-earned money on yourself.
How it works: Intentionally spend down your nest egg until it's gone. To do this safely without running out of money, you must work with a financial adviser to calculate a precise withdrawal rate after your long-term care and emergencies are fully funded.
Whatever you do, don’t wait until it’s too late
Estate planning should be part of your retirement, whether you have children or not.
It might be hard to think about something that is decades away, but planning for how your estate will be distributed while you're healthy and of sound mind is the best way to ensure your wishes are honored.
If you do nothing and something happens, your assets could end up in probate.
“If you want to support the Humane Society and it's not listed as a beneficiary, then it goes to the state courts to decide," says Ungerott. "Usually, that means it goes to the next of kin,” not the Humane Society.
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