“I lost my husband in July. He was just 63. I am 56. We have our house together, some money in the bank – almost $30,000, and his 401(k) – $810,000. I have a small IRA – about $65,000 – from when I worked years ago. I did get $75,000 in life insurance.
I’m trying to figure out the best way to pay my bills from all this. My husband really enjoyed listening to you and said I could always ask you if he wasn’t here.
I would very much appreciate your advice.”
I am so very sorry for your loss. Your husband honors me with his trust to advise you.
The first counsel I would give you is to give yourself room for grief and joy. Losing your husband at such a young age is a shock to your system that requires time, space, and prayer to process. Be sure to include in that process remembering the love and time you shared together. Allow yourself the joy of those memories.
Second, take the time (perhaps with a trusted advisor, a family member, or friend) to carefully review your expenses. Knowing what you need on a monthly basis will allow you to make subsequent decisions more confidently. You have significant assets. How you use those assets will be determined by how much income you need and when you need it. Be assured that, properly done, you will have all the cash flow you need, directly deposited into your bank account – just like a paycheck.
Next, please review the assets you have to determine how they should best be invested to provide you with the financial security you deserve. At the same time, your advisor will look carefully at your husband’s 401(k) to ensure that you have access to those funds should you need them in the near future.
And, when you are ready, you should seek the counsel of a trusted estate planning attorney. You will need freshly prepared documents. You will need to make some decisions about people who will play important roles in settling your estate. You will be making these decisions based on what you know and feel now. You will then review these documents and decisions on a regular basis to keep them aligned with your goals and wishes.
I trust that you will, in time, put all this into good order. Remember, you don’t have to do it alone.
“Recently, I watched your MtM show and someone asked a question about social security. I could have misinterpreted something you said and need clarification. I understood you to say that if someone waits until 70 to collect social security (like I did), if they die, their spouse will not collect the extended benefit, only what they would have received at my full retirement age.
I did the research before delaying and my understanding is as follows: The rules are different for survivor benefits. A widow or widower whose spouse waited until 70 to file for Social Security is entitled to the full amount the deceased was getting — including the delayed retirement credits — so long as the surviving spouse has reached full retirement age. Please let me know. Thank you.”
Our trusted Social Security Partner, Mr. Mark Bacak, answers:
Your understanding is correct. A surviving spouse gets the full benefit including delayed retirement credits. Living spouses who receive a full or partial spousal benefit do not enjoy the benefit of delayed retirement credits. I suspect the difference between living and surviving spouses caused the confusion by the way those spouses collecting the full or partial spousal benefit will get the full amount including the delayed retirement credits upon the death of their spouse. Again, you’re understanding is completely correct and the fact that both a wage earner and a surviving spouse enjoy the benefits of delayed retirement credits makes this a very attractive strategy when choosing Social Security options. Feel free to contact me if any of this information is not as clear as I hope it is.
“I went to a financial advisor to have my investments reviewed. When I got her recommendations, I saw two things that surprised me.
The first was she gave me all the information I need to do it myself and not have to pay her.
The second was that a lot of the mutual funds she recommended are not rated 5 stars by Morningstar. I thought she would want to put the very best into her investments, but she didn’t.
Can you explain why she did this?”
I can explain, but I fear you won’t understand.
Many quality financial advisors (MtM and More than Money included) provide no cost (free) second opinion reviews for prospective clients. As with this advisor, these reviews are intended to be valuable by providing specific and helpful information.
For some prospective clients – you for example – this interaction offers the temptation to take the plan and run. They see this as getting ‘something for nothing’. They are confused as to why the advisor is ‘giving away the store’. There is a simple reason.
These second opinion meetings are a two-way street. Prospective clients are meeting, interviewing, and assessing the financial advisor to see if they are a good fit. The advisor is doing the same thing. Quality clients are looking for an advisor who provides the services they need and advice they can trust. Quality advisors are looking for clients who provide an opportunity for a long-term partnership and ones they can trust.
So, if a prospective client (you seem to fit this profile) sees this initial interaction as an opportunity to take get the free stuff and run – the advisor has actually benefitted. In short order she has identified a potential client she would not be able to trust. She has lost a couple of hours, not a couple of years – or worse.
Your belief about Morningstar Five Star funds demonstrates that – despite your instincts – you may not be as investment ‘savvy’ as you might believe.
It has been years (decades, perhaps) since many professional advisors used the Morningstar rating system as the primary basis for selecting quality investment (mutual funds, ETFs, etc.) options. Morningstar is an exceptionally valuable research resource for many financial advisors. However, many studies have shown that the lower rated investments can often outperform the ‘Five Star’ funds going forward. It is indeed true that “past performance is not a guarantee of future returns”.
I suspect this young lady is an excellent financial advisor and you missed an opportunity to work with her.
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