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Why Building a Nest Egg You Won’t Outlive Is One of the Best Things You Can Do in Life

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What Our Clients Are Saying

Tumwater provides a thorough explanation of my assets and how best to meet my needs.

Ruth M, 6/17/2021 

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[I] sleep well at night knowing Ben and his team are taking care of our investments.

Kealy B, 6/16/2021 

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Tumwater has helped my family think about our financial future– but in a uniquely holistic way.
I really value being able to ask for Ben’s advice on any financial topic, be it immediately related to our investment planning or not.
Ben sees and understands how the big picture impacts the tactical decisions he helps you make.

Matthew M, 6/17/2021 
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Tumwater allows us to enjoy our retirement.

Paul M, 6/17/2021 

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We have 100% confidence that you know what you are doing which is so much more that most professionals who call themselves a financial advisor.

Kealy B, 6/16/2021 

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Tumwater has given me a place to have my money managed, to allow the money to work for us, thereby increasing in value every day. Tumwater invests the money into funds that grow, watches those funds to stay [diversified]. You hire a Financial Advisor to focus on increasing the value of your saved money. This allows you to focus on your own profession to succeed. The money invested then grows and is there for life’s big bills, college for youngsters, retirement, etc.

Paul M, 6/17/2021 

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My first contact with Ben occurred when he was the Financial Advisor for my former employer… The first one-on-one meeting we held to discuss my financial future
was a total wakeup call (Yes, there were tears). He laid out an honest appraisal of my current financial situation and what I needed to do differently to move positively
toward a reasonably comfortable retirement. I took his sound advice to heart. Last year, I was unexpectedly laid off and that led to my decision to retire at the age of 70. I reached out to Ben and he immediately set up a time to talk about the best options for my 401K. A plan to roll the funds into an IRA was set in place and implemented by Ben and his co worker, Jackson. I am confident that Ben has my best interest at heart.
Communication is never an issue—I always know I will receive honest, appropriate guidance.

Patricia A, 6/17/2021 

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I find the entire staff consistently responsive. This is significant for me. Once I recognize I need information, it is helpful to receive that information quickly.

Jenni Y, 6/17/2021 

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You have been a valuable resource for others in our family. You have gained our trust and respect and this is very important at our stage in life!

Cherie and Jim C, 6/17/2021 

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The service provided by Tumwater has met all of my needs.

Jack C, 6/17/2021 

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Tumwater has been a great resource for financial planning for my future and eventually my retirement. I’ve worked with Ben to find the right balance of investments that suit my long-term saving goals. I also have appreciated Ben’s help with other savings goals, whether it’s regarding an emergency savings fund, or saving for a specific purchase. He is always willing to answer my questions and explain the rationale behind investment moves. He also reviewed my 401(k) plan which was very helpful!

Brooke W, 6/16/2021 

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They have helped me feel safe with my financial future and provided me a valuable resource to come to with any questions about financial decisions and planning.

Jack C, 6/17/2021 

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Through Ben’s guidance for over 10 years he has us brought to a comfortable financial position heading into retirement.

Nic C, 6/16/2021 

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I have complete trust in Tumwater, they alleviate a huge burden of stress in my life.

Jenni Y, 6/17/2021 

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Tumwater has helped to make us feel financially secure over the long run because of the sensible investment strategies Ben has employed for us.

Cherie and Jim C, 6/17/2021

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Why Building a Nest Egg You Won’t Outlive Is One of the Best Things You Can Do in Life

Posted on:
October 7, 2021
Time to read:
5 minutes

When my wife and I first started planning our financial future our focus was entirely on making sure we would have all the money we needed to be able to do the things we wanted to do for the rest of our own lives. We wanted to be independent, self-sufficient, and avoid being a burden to our family or society. But as our business grows and our disciplined savings plan has paid off even better and earlier than we expected, planning for our lives alone has begun to feel a bit self-centered.

At the very least, we’re beginning to realize our planning, entrepreneurship, and retirement savings discipline is going to work even better than we’d hoped. The nest egg we’re building is going to outlive us, and so our financial plan needs to extend beyond our own lifetimes as well. In working with my clients — and through my own planning over the last few years — I’ve noticed a few distinct benefits to thinking about money and wealth management from a multi-generational perspective.

1. Families that Make Investment Decisions Based on What’s Best for the Next Generation Make Better Investment Decisions

Imagine there is an investor. He and his spouse are 90 years old and live on the income they receive from his military pension, her teacher’s pension, and Social Security. The couple then has hundreds of thousands of dollars sitting in their bank account as an emergency reserve. They have long-term care insurance to cover any needs in that arena.

For the past decade, they have never withdrawn a single penny from the investment portfolio and there is no reason to believe they ever will. At this point, the investment time horizon of their portfolio extends well beyond their own lifetimes. Their children and grandchildren — who range in age all the way down to 19 years old — will almost certainly inherit 100% of this portfolio. Their children are all gainfully employed, and it seems this inheritance, when they receive it, will likely just further their own savings efforts.

Despite all this, 75% of their portfolio of investments is in short-term municipal bonds. They are not even in a tax bracket where municipal bonds make sense and those bonds earn less than 1% per year today while inflation steals more than 2% of the purchasing power of their money each year. In other words, they are unable to see that this money will have no part to play in the rest of their lives and could, instead, be invested to benefit the lives of their children and grandchildren. This has led them to making investment decisions that result in the value of each dollar they own diminishing with each passing year.

On the other hand, let’s say there is another investor who has come to exactly that realization. She’s a widow and lives comfortably on the pension and Social Security from her deceased husband. She understands that the money she has invested is for her kids and grandkids and she wants to invest with their time horizon in mind. So, she sets aside a more-than-adequate safety reserve for any emergencies that may arise for the rest of her life and she invests the rest in a diversified portfolio of stocks and mutual funds.

In my opinion, the latter of these two investors is likely to be happier and more fulfilled.  And this brings me to my next point.

2. “Where Your Money Is, There Your Heart Will Be Also.” Matthew 6:21

When you reach a certain level of financial success and the risk that you will run out of money in your lifetime effectively fades away, you have two choices for how you will plan and live the rest of your financial life. 

  1. You will plan and live a financial life focused on simply making sure you spend your last dollar on the day you die, or…
  2. You will live a financial life focused on how your money can not just take care of you for the rest of your life, but also grow to have a meaningful impact on the people you love the most in this world.

spending golden years on the beach

Let’s be clear: choice #1 is not evil. You saved x amount of money and if you want to make sure you get all the benefit you can from it during your golden years, that is certainly your right. However, it is a financial life entirely focused on yourself and I think it’s worth asking how that focus might affect who you are over time. Which type of person will your grandkids want to spend time with? Which type of person would you want to be?

Focusing your energies in retirement toward making your nest egg a life-giving resource not just for your lifetime but also for the people you love is a purpose worthy of lifetime effort.

3. It’s Better for the Next Generation

There seems to be a generational belief in today’s retirees that a meaningful inheritance will destroy your kids. But like all tools, money is only as good or bad as the person holding it. We certainly have a responsibility to train the next generation to be people with the character to be able to handle a meaningful inheritance but, if they can’t, it won’t be the money’s fault. Money doesn’t ruin people’s character, it reveals it.

You’ll need to accept the responsibility for training your kids how to handle large sums of money and manage their personal finances. Whether you’re teaching them how to create a budget, pay taxes, avoid credit card debt or open savings accounts, that responsibility will need to continue for the rest of your life. If you’re training them and involving them in the management of the family money, your relationship with your kids can continue to grow. If your kids know that you are managing your money with them in mind, aren’t they more likely to respect you?

By modeling this attitude of stewardship — managing our money for the benefit of the whole family rather than just for ourselves and trying to leave things better than we found them — it’s more likely our kids will adopt the same attitude.

Final Thoughts

Imagine if you had had a “family bank” to fall back on in hard times or to use to pursue opportunities as you came across them. Where would you be today? Money gives us the ability to capitalize on opportunities and to weather challenges better than we can without it. Why wouldn’t we want that for our kids and grandkids?

Ultimately, none of us get to take it with us. The truth is, we’re all managing the money in our lives for the benefit of someone else. If we embrace that fact, and do our best to leave it better than we found it, we’ll have a healthier attitude, we’re likely to enjoy, and be enjoyed by, our kids and grandkids more, and they’ll have a richer, fuller life.

If you would like to find out how you can start building a nest egg with your own retirement plan, download a free copy of our eBook, “How to Retire with Confidence and Clarity” and sign up for our Retirement Income Academy course!

Disclosure:

Tumwater Wealth Management is a registered investment adviser and may only conduct business in states where it is registered or exempt. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

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