Help me please. I am a 68 year old woman married for 17 years to the love of my life. Our finances have always been separate and I signed a marriage contract acknowledging that her son will inherit his estate held in a living trust (approximately $ 3 million). I get our house and he leaves me $ 350,000 in his will.
The husband received a lump sum payment from Social Security before we met. We have always lived debt free and I have a beautiful 2020 vehicle. While I led a modest life, his health prevented us from enjoying a vacation for eight years. I look forward to traveling more in the future. My husband is terminally ill and will probably only live for a year or two. His medical bills are not my responsibility.
In 2019, we built a new house. While its exact value is unknown, I will likely free up around $ 800,000 for this asset, hoping to buy a smaller house when it dies.
I get Social Security and a pension, and I now get about $ 20,000 in total per year. I have been an ambitious saver and have now reached around $ 350,000 making a lot of money on my mutual funds. The other stocks are worth around $ 20,000 and I have a 457 account worth $ 65,000. I currently have $ 60,000 in savings and $ 20,000 in checks.
I’ve never taken a dime out of my investments, and I doubt a lot will change that would require it until I’m on my own. My husband pays our living expenses now. My goal is to enjoy the rest of my life, leaving as much money as possible to my four siblings.
Sounds pretty good to me, but I’ve taken some risk by holding my savings in stocks to earn an annual realized return of over 15% over the past decade. And I do not have long-term care insurance.
Can I expect to live my life in good financial health?
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I am sorry to hear of your husband’s illness. It is such a difficult experience to have. I am happy to see that you are planning your finances after his death – it will save you a lot of headaches and heartache, and give you stability and security in your old age.
To arrive at your answer, you will need to do a serious analysis of your current and future expenses. Keep in mind, however, that everything can change in a matter of years or even a year, so be flexible when planning your finances for the future.
First, make a plan (some might call it a budget), said Robert Gilliland, managing director and senior wealth management advisor at Concenture Wealth Management. Factor in any expenses you plan to spend after your husband dies, as well as inflation. You can break it down into the short term, for example one to five years, the medium term, which would be six to 10 years, and the long term, or beyond 10 years. Include your projected housing expenses and maybe plan if you’ll stay in your current home or find something smaller. Also think about health care, which is a big expense in any retiree’s budget, utilities, emergency expenses, occasional meals or entertainment, etc.
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After performing this analysis, look at what are your expected sources of income. You mentioned Social Security and a pension, and you can make regular withdrawals on your investments. Compare your income to your expenses. “Once you have that number, you can figure out what the ‘reasonable’ asset withdrawal rate is to determine the excess funds available for travel,” said Gilliland.
Note on your investments: Advisors use this compartmentalized approach with investing, in which case it is common to see medium and long term needs invested with more risk. However, you do mention that your savings are taking a lot of risk right now, and you should consider speaking to a financial advisor – even the one where your money is stored – to see if this is the right asset allocation for you. If you live on a fixed income, you can’t afford to lose too much in your wallet. Diversification and the right allocation will be the keys to your success. “At the end of the day, being able to guarantee that the funds will be available to meet your needs should be the most important thing,” said Gilliland.
Also, contact the Social Security Administration office to start planning for other potential benefits you may be entitled to, such as widow’s allowance, said Jude Boudreaux, Certified Financial Planner and Planning Center Partner. . As a result, you might even receive more money each month, depending on how much your survivor benefit exceeds your personal benefit, and it doesn’t hurt to start figuring out the benefits or the numbers now. You may be on hold with the Social Security Administration for hours when you call, but it will be worth it. Here is more information on SSA survivor benefits.
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You mentioned that you did not have long term care insurance. This can be quite costly, especially since you are a bit older than the typical “ideal” candidate (counselors often suggest that people start looking for long term care insurance in their 50s). This may make sense to you, so it doesn’t hurt to research certain policies, but be aware that there are other options for you as well, such as hybrid policies that might give you long term care and benefits. possible advantages. death benefit for your brothers and sisters. Some annuities also have long term care endorsements, but you should carefully review these products before you begin. Here is a complete guide to long term care insurance that you can consult.
This isn’t financial advice, but it’s important nonetheless – stay active and take your health seriously. Take long walks, try to maintain a healthy diet, and keep in touch with loved ones now and after your husband dies. These little daily activities make all the difference in the good old days.
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Here are some other suggestions. Gilliland said he always recommends taking a year before deciding whether or not to move after losing a spouse because this time is so emotional and people can make decisions they ultimately regret.
You might want to start doing math now and ask your husband for advice. You mentioned a marriage contract, but that does not prevent someone from giving a gift to their spouse during the marriage. If the trust you are referring to is an inter vivos or revocable trust, your husband could give you money now without tax consequences while he is alive. Of course, this may sound like a sticky situation and this suggestion is by no means meant to cause drama between you and your husband and your son, but it doesn’t hurt to ask your husband what he thinks about it. . , Boudreaux said. “It is worth exploring.”
At the end of the day, you seem very conscientious about your finances, and that will definitely help you down the road. Just try to think of everything you will need, financially or otherwise, so that you are not caught off guard when your husband passes away. And make sure he and you have multiple conversations about what he thinks you should know after he’s gone – from bank account passwords to the little chores he can normally do around the house.
I wish you good luck.
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