Are You Planning to Retire?

Like everyone else, you want to save enough money to live comfortably when you retire. It's possibleóif you prepare. And no matter what your age, the time to begin that preparation is now. Now is the "accumulation period" when you acquire the assets that will generate your life-long retirement income later.

Your Lifestyle
" We're worried about our lifestyle," said one middle-aged specialist. "We have big mortgages, heavy college tuition costs for the kids, and various other expenses. We don't know if we can continue to meet them all." He placed "lifestyle concerns" as the number one personal worry of practicing physicians today.

You may not be able to do much about the college expenses, but you may find some places to cut back. Focus on eliminating the biggest expenses facing you in retirementóby paying off the mortgage on your home, for example.

Asset Protection
Plan to protect your current income-generating assets from creditors, litigation and taxes. Remember that the average American has a life expectancy of 18.6 more years when he or she reaches age 65, but that physicians are calculated to have a longer life expectancy than the average. As a result, your retirement assets will probably have to produce inflation-busting income longer than most people's. You simply cannot afford to have those assets taken away from you or sharply diminished before you have put them to work for your retirement income.

An "Unlimited" Retirement Option
Qualified retirement plans have set limits restricting the amount of money you can put away for retirement. Irrevocable charitable remainder trusts have none.

Consider setting up an irrevocable, net income with make-up charitable remainder unitrust. Suppose, for example, that this is your 46th birthday. Put $35,000 into that trust. (As we said, you can put in as much as you want. There is no limit.) Then for the next 18 years, on your birthday, put an additional $10,000 into the trust.

Design the trust to pay you 5 percent income as long as you live, with your favorite charitable organizations to receive what remains after your life.

The trustee, for the first 19 years, could invest the trust assets mainly for growth. He could earn 3 percent income and 7 percent growth. During these years, you receive as income either the actual yield or the designated 5 percent, whichever is less. After the 19th year of contributions, the trustee could reverse the investment plan and invest mainly for income. He could earn 7 percent income and 3 percent growth.

The result? When you reach age 65 and are retired, you will not only receive 5 percent of the fair market value of the trust assets revalued each year, but also a "make-up" of the income you did not receive those first 19 years (the amount of income between your actual yieldówhich would have been about 3 percentóand the 5 percent mandated by the trust instrument). That make-up income will be from excess income earned each year after the 19th year, when the trustee changes the investment goal and invests mainly for income (7 percent income return; 3 percent growth).

Your benefits based on the above assumptions would be:

• You will receive charitable contribution deductions the first 19 years totaling $70,776.
• Your projected income the first year of retirement will be $32,080, and it can increase each year.
• For a life expectancy of 37 years from the time you set up the trust, you will have received almost $800,000 of "retirement" income from your $215,000 of contributions to the trust.
• Your irrevocable trust will likely be protected from litigation and creditors.
• You will ultimately make a charitable gift to your favorite charitable organizations of more than $1,00,000, to be used as you propose.
• You will derive both personal satisfaction from making this gift to a worthy cause and recognition of your philanthropic leadership in your community.

Take the First Step
To learn more about charitable gifts that supplement retirement income, just ask us. your favorite charitable organizations will be glad to consult with you and your financial advisors about plans that work for your particular situation.

Please contact Mary Ludwig, Development Director at 712-732-5127, for more information.

The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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