At 25, 30 even 35 you're not apt to be giving very much thought to your retirement. By the time you get into your forties, however, you should be ready to accept the inevitability of getting older -- or at least to acknowledge it as the perferred alternative.
In spite of the laws prohibiting discrimination because of age, there will surely come a day when you will move -- either voluntarily or by necessity -- from the workday world of factory, office or store to the world of retirement.
That move will mean much more than just a change in your financial circumstances. It will bring major changes in your way of life. And this new personal environment will be a strange and uncharted place -- a world where many of your old values and reference points will have disappeared.
It's a tough move. Specialists in the field of stress analysis (personal stress, that is) consider retirement one of the most traumatic experiences of a lifetime.
You can lessen the trauma and substantially reduce the stressful effects by early and careful planning. You don't think you need to plan ahead -- that things will probably work out anyway? Well, it wasn't raining -- yet -- when Noah started to build the Ark.
Virtually every aspect of your personal life is likely to be affected by retirement. You may have to consider a more suitable type of housing, possibly involving a move to another geographic area: changed insurance needs, modified investment objectives, a massive increase in unstructured time with a corresponding expansion of self-generated activities and major changes in interpersonal relationships, particularly between spouses.
In the coming months, we'll regularly take a closer look at some of these things. But don't expect answers -- the "right" answer is different for each person.
What we will do is expose some of the questions, with the hope that the brief discussion in these columns will point you in the right direction and make it easier for you to come up with some right answers on your own.
A further word of qualification: It isn't possible, in this limited space, to cover the many different kinds of social arrangements such as the never-married, widowed, divorced, one-worker and two-worker families, etc.
So my comments will be aimed primarily at couples, which you should be able to extrapolate to fit your particular needs.
Question: I own some shares of stock, now worth less than $3,000. Can I give this stock to my children without running into any tax problems? And can the dividends continue to come to me?
Answer: Yes, you can give the stock to your children, and neither you nor they would have to pay any federal gift tax. (See the column of May 5 for an explanation of how to do this withot going through a broker.)
But once you have given the children the stock, they (as the registered owners) would receive the quarterly dividends -- and would be liable for reporting those dividends as income on their tax returns.
The only way to give them the stock and still retain the right to the dividends is to establish a trust in their names with you as the income beneficiary. But this is a very cumbersome device for a relatively small asset. In addition, it would not take the asset out of your estate.
You could name one or more of your children as a co-owner of the shares. You would have to have the stock certificate reissued listing yourself and the selected child as "joint owners with right of survivorship," and using your social security number.
That form of ownership would ensure that you got the quarterly dividends (and incurred the income tax liability), and the named child would get the shares after your death.
But why not just keep the shares in you own name? Joint ownership would mean that you would need your child's signature (in effect, his or her approval) if you decided to sell the stock some day. If you retain sole ownership you retain sole control.
You can be sure that your children will get the shares after you're gone (as well as other assets you own) by means of a properly drawn will.