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please help ... widow's porfolio
Old 06-28-2005, 01:00 AM   #1
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please help ... widow's porfolio

I ran into this web page by accident and I have been reading them for couple months, there are a lot of smart people here so please give me some suggestion in my situation.
I am a recently widow in California, I have about 500K in his 401K still with his company mostly invest in fix income, I have 250K in my 401K and another 250K of his life insurance. I am 50 and still working but there is a possibility that I could lose my job any day, I have 2 daughters, one just start college as a freshman and one going to be a junior this fall. I don't have a mortgage but I need to help both my daughters to pay for college as they still don't qualify for financial aid. My 250K is in variable annuity at New York Life. 100K is in MM for the kids, 150K is at fidelity in various mutual funds.. My question is do I have enough money to retire if I lose my job next month? How do I maximize my earnings? I have tried FIRECALC but I don't know if it takes in to consideration of health care, car repair and such.
For many years my income is only secondary, being primary bread winner is so stressful. I know I can collect his SS at 60, but will it be enough to live comfortably for 10 years and suplemenent SS at 60. I am having a chance now to babysit my 7 years old nephew for my sister and I rather do that than go find another job.. I am too tired of working and I like to do something that I like.
Thanks again for reading and helping.
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Re: please help ... widow's porfolio
Old 06-28-2005, 08:18 AM   #2
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Re: please help ... widow's porfolio

I think the best start for you would be to arm yourself with some knowledge. Read books that are recommended by people on the forum. I think once you have a solid financial foundation you will be more confident handling your finances. Call me crazy but I think you feel overwhelmed by your situation and you should take small steps to control it.

Quote:
I have tried FIRECALC but I don't know if it takes in to consideration of health care, car repair and such
I don't know if you do this already but tracking expenses for an extended period of time will get you started. It will help you come up with budget. Should include all of your personal expenditures as well as college funds (which will dry up once they graduate and I would encourage them to get out in 4). I think healthcare is a toss up for most people. Some people on the forum absorb a little of the risk, especially if healthy. Many would rather be free from work than just work for healthcare coverage.

I think before anyone recommends any asset allocation models you should post how it is currently divided and what sort of risk level you are comfortable with going forward.

Quote:
I have 250K in my 401K and another 250K of his life insurance
I know you can handle your finances if you are smart enough to set aside some money in retirement.

Quote:
I am a recently widow in California
Sorry to hear of your loss.
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Re: please help ... widow's porfolio
Old 06-28-2005, 08:57 AM   #3
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Re: please help ... widow's porfolio

Part of the process of finding out if it is 'enough' is knowing what your income needs are.* Did you run a budget or can you get a feeling of what your expenses are?* As wildcat said, this is the starting point.* As far as healthcare goes, if your husband was eligible for retirement, you might be able to continue with his plan.* You have $1.15mil.* This will reliable produce about $46,000/yr in income if invested properly without broker fees, so you shouldn't have big worries.* Your freshman may also be eligible for his SS survivor benefits depending on age and you have the $100k for the kids.*

I wish you luck.* It's easier for us to answer your questions if you can ask more specific questions.*

Chris
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Re: please help ... widow's porfolio
Old 06-28-2005, 09:13 AM   #4
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Re: please help ... widow's porfolio

I have two immediate thoughts about your situation:

1) I find it very hard to understand why your daughters do NOT qualify for college financial aid, since your income, presumably, is not huge- and most of your assets are in retirement accounts, which I think are exempt from EFC determinations. I just don't get it.

If I were you- I'd consult a reputable college financial aid specialist. On another website- strictly for various types of financial advisors- a CFP spoke very highly of this group (I have no experience with them) that can be reached at 919-479-9401. You can also try www.123college.com, or try googling college financial planning, college financial aid, etc.

2) My second thought is, I think we are in for some VERY tough financial times over the next 5-10 years for several reasons, including a massive worldwide real estate bubble. Stay conservative. If I were you, my main goal over the next 5-10 years would be not to lose any money. If you can keep your $1,000,000 SAFE over the next 10 years, I think you'll be in great shape. I'd avoid stocks and long term bonds. CDs, CD type fixed- NOT VARIABLE- annuities, MM, cash is king right now, in my opinion- but others here will disagree.

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Re: please help ... widow's porfolio
Old 06-28-2005, 09:16 AM   #5
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Re: please help ... widow's porfolio

Also, now is the time to get a good long term care insurance policy on yourself- either GE (Genworth) or John Hancock. Lack of the above is responsible for more busted retirement budgets than anything else. Get it now, while it's cheap, and you are insurable.
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Re: please help ... widow's porfolio
Old 06-28-2005, 09:23 AM   #6
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Re: please help ... widow's porfolio

Sorry for your loss. My sister in law is in a very similar situation. She decided to hook up with a brokerage firm that her son is affiliated with and go with their advice. I initially was opposed to this because of the fees associated with the funds they recommend, but she needed a lot of hand holding so maybe its not a bad way to go for her. They did recommend a well balanced mix for her.

In your case, I think if you hire an independent financial planner to review your situation he could lay out a plan for you to implement through your Fidelity account.* Ask around and get references on the planners you consider. Read lots of material before you meet with a planner, the more you know the better off you will be.

Good luck!
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Re: please help ... widow's porfolio
Old 06-28-2005, 09:52 AM   #7
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Re: please help ... widow's porfolio

Quote:
Originally Posted by qbkatran
I ran into this web page by accident and I have been reading them for couple months, there are a lot of smart people here so please give me some suggestion in my situation.
I am a recently widow in California, I have about 500K in his 401K still with his company mostly invest in fix income,* I have 250K in my 401K and another 250K of his life insurance.* I am 50 and still working but there is a possibility that I could lose my job any day,* I have 2 daughters,* one just start college as a freshman and one going to be a junior this fall.* *I don't have a mortgage but I need to help both my daughters to pay for college as they still don't qualify for financial aid.* My 250K is in variable annuity at New York Life. 100K is in MM for the kids,* 150K is at fidelity in various mutual funds..* My question is do I have enough money to retire if I lose my job next month?* How do I maximize my earnings?* I have tried FIRECALC but I don't know if it takes in to consideration of health care, car repair and such.
For many years my income is only secondary, being primary bread winner is so stressful.* I know I can collect his SS at 60, but will it be enough to live comfortably for 10 years and suplemenent SS at 60.* I am having a chance now to babysit my 7 years old nephew for my sister and I rather do that than go find another job.. I am too tired of working and I like to do something that I like.*
Thanks again for reading and helping.
Dear Qbkatran:
My heartfelt condolences to you and your daughters on your recent loss. *Losing a lifetime spouse is always tough, but at your still young age, with two daughters, it is perfectly understandable that you would be feeling a little overwhelmed.
In my opinion, (for therapy reasons), it would probably be a good idea to continue in your job as long as you can. *From what I can read into your post, there is a threat that you could lose the job in the next 30 days or so. *Again, in my opinion, if that event happens, it shouldn't send you scurrying about looking for another one.
As near as I can figure, you have close to $l,000,000.00 in financial assets, and a paid for house in Calif. (Pretty penny there, regardless of what area in Calif. it is in).
You have adequate financial resourses to live a very comfortable life, unless you make some very drastic inappropriate investments. *Take baby-steps at this period of time. *DO NOT do business with salesmen. *(Brokers, financial advisors, etc.). *Spending a little time on this board, and taking your time familiarizing yourself with various approaches should be a goal of yours for a while.
Good luck to you, and take care.
Jarhead


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Re: please help ... widow's porfolio
Old 06-28-2005, 09:58 AM   #8
 
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Re: please help ... widow's porfolio

Agree with jarhead on this. Do not Talk to any financial salesman. You have got to do this one step at a time yourself. Keep reading posts that are of interest to you and arm yourself with information.

Continue to play around with FireCalc and it won't be a mystery to you. There are no fast answers in this area.
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:07 AM   #9
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Re: please help ... widow's porfolio

Rats!

Mellowed out on coffee and pastry - I logged back and - was going to say something brilliant.

Alas - I must be reduced to seconding ex- Jarhead's and Cut-Throat's posts.

I would look into Art's financial aid for college also - since you are both in CA - might turn up something.

Above all - don't get in a rush - or let someone rush you.
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:08 AM   #10
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Re: please help ... widow's porfolio

Quote:
Do not Talk to any financial salesman
Surprised they haven't call yet. *That is why I suggest you arm yourself with financial knowledge. *You will gain confidence and avoid being taken.

I am pretty confident you could retire if you really wanted to and if you are ready. *Most people here are willing to give up a few luxuries and live on less in order to retire early. * *
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:15 AM   #11
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Re: please help ... widow's porfolio

This might sound harsh, but even if your daughters don't qualify for financial aid and nothing comes up on the link Art posted, perhaps they can look into student loans? My wife and I both self funded college, didn't qualify for any aid other than some interest deffered loans (very small, I might add) and left college with a combined 60k in debt. But it was well worth it, we got good jobs and were able to pay them off quickly. Plus interest rates are low now, and having some "skin in the game" helped us stay focused on getting college done. Considering your difficult situation, I would think not using up your nest egg would be a top priority. If everything works out over the years, you can always help them out later. I'm very sorry for your loss.
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:42 AM   #12
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Re: please help ... widow's porfolio

Thanks for all your advise, it confirms what I am in the process of learning.

1. My goal is conservative.. I like my porfolio to earn 5% per year. So far, except for the 100K that I put in PenFed, the rest of money did not earn at much. My husband's 401K still with his employer but in my name now, and I have 70% income, 10% blue chip, 20% asset allocation. So far this year, this 500K porfolio earn only 1.8%. My 401K is with NY life using variable annuities, I get into it long ago without knowing what annuities are, and the earning rate is 1% so far this year. I do put most of my liquid money in ING and Imigrant Direct from the advise I read on this board before. PenFed only insured 100K so I am afraid to put roll out the 401K and put money in there.. Should I? or should I not? Is there any way to have a guarantee 5% return on my investment?
2. I am an old timer mainframe computer making 80K a year, my youngest is over 18 so I don't qualify for SS. I have filled out FAPSA many times but the kids does not qualify for financial aids. They can borrow loan to pay for tuition. I only need to give them 500/month each for room and food.
3. What should I do with my house, it worth about 500K, it seems like a waste for me to live in it. Should I sell it? rent it out? to generate income and find a cheaper place to live.
4. I just bought long-term care with NY life, and ex co-worker works for NY life and she helps me get that.

I made an appointment to see a finanical advisor on Thursday, but I am worrying because I am afraid not only losing money but also pay additional 2% fee to the advisor. Reading your previous posts, I think you guys recommend against it.

Thanks again for your kind words... I will keep on learning to eventually comfortable with manage my own finance.
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:46 AM   #13
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Re: please help ... widow's porfolio

Quote:
Originally Posted by Laurence
This might sound harsh, but even if your daughters don't qualify for financial aid and nothing comes up on the link Art posted, perhaps they can look into student loans?*
Thats not harsh at all. I paid for most of my college education through student loans and part time work. My parents kicked in some money for miscellanous expenses but when a person has to fund most of their own education, it makes you appreciate your degree even more.
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Re: please help ... widow's porfolio
Old 06-28-2005, 10:48 AM   #14
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Re: please help ... widow's porfolio

A couple of more thoughts:

If you are past your surrender charge period on your New York Life Variable Annuity, and you want to be very safe over the next 5-10 years, you might want to do a 1035 tax-free exchange from there into a CD-type FIXED annuity (no fees, unlike a Variable Annuity).

CD-type fixed annuities (aka multi-year rate guaranteed annuities) have level, guaranteed interest rates that match the surrender charge period. The fees you're paying on the VA probably make it less attractive than a CD-type annuity. I don't recommend traditional fixed annuities (where you must "trust" the insurance company to give you attractive renewal rates- and I don't recommend Equity-Indexed Annuities either (different from VAs).

I DO like "I Bonds" very much- now at 4.8% tax-deferred, totally safe (US Savings Bonds) and totally liquid after 1 year (3 mos loss of interest if redeemed in less than five years.) You can buy $60,000/year maximum, paper and electronic. Very nice for people who want safety and liquidity.

Good luck, trust your gut, avoid as much risk as you can (over the next 10 years), and you'll do fine.
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Re: please help ... widow's porfolio
Old 06-28-2005, 11:45 AM   #15
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Re: please help ... widow's porfolio

Quote:
I made an appointment to see a finanical advisor on Thursday, but I am worrying because I am afraid not only losing money but also pay additional 2% fee to the advisor. Reading your previous posts, I think you guys recommend against it
Yikes!! Cancel and set up an appointment to see a fee only planner if you feel the need. You pay for the advice and that is all. Others will charge ongoing expenses and put you in actively managed high exp ratio and/or load funds. Many of them hardly do what is best for the client. I have a friend that just got in the business and I know what they do. They will sell you funds that are not as good as index funds because the branch and the planner will make money by doing so. They don't make enough money selling index funds and most are too foolish to believe index funds are superior. Please reconsider.
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Re: please help ... widow's porfolio
Old 06-28-2005, 12:16 PM   #16
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Re: please help ... widow's porfolio

One last thought for now:

Do NOT buy term life insurance (UNLESS you need coverage for a finite period of time. Life ins. cos. end up paying death claims on only about 1.5% of all term life insurance policies issued.)

But... you may want to buy a brand new (about seven years old) dirt cheap type of permanent (as opposed to term) life insurance called "No Lapse Universal Life Insurance" (also called "Universal Life with Secondary Guarantees").

These policies are usually sold with little or no cash value buildup to lower premium costs. Many use the new 2001 Mortality Table (vs. the 1980 Mortality Table) to further lower premium cost.

As long as you PAY ON TIME (CRITICAL- with these policies)... you get dirt cheap, lifetime death benefit. Very Sweet. I like Jefferson Pilot and Midland National. These products can only be bought from (gasp!) commissioned insurance agents.

A WARNING about so-called NO LOAD (no agent commission) life insurance policies (Ameritas, USAA, TIAA-CREF, etc.):

In DEATH BENEFIT applications (as opposed to CASH VALUE ACCUMULATION applications), NO LOAD LIFE INSURANCE POLICIES ARE MORE EXPENSIVE (often MUCH more expensive) than the most competitive commissionable products I mentioned above.

Focus on the death benefit, the guaranteed premium (in the case of no-lapse UL), the company's Weiss Research rating (B+ or above. Company strength is very important in no-lapse UL policies).

DO NOT be concerned about whether the product is commissionable or "No-LOAD". If you buy NO LOAD without shopping- you WILL get ripped off- probably very badly.



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Re: please help ... widow's porfolio
Old 06-28-2005, 12:19 PM   #17
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Re: please help ... widow's porfolio

Quote:
Originally Posted by wildcat
Yikes!!* Cancel and set up an appointment to see a fee only planner if you feel the need.*
Listen to wildcat. Try googling Garrett (I think) Financial to get an hourly planner.
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Re: please help ... widow's porfolio
Old 06-28-2005, 12:53 PM   #18
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Re: please help ... widow's porfolio

I agree with Art that I-bonds are a good investment at 4.8% currently,
totally safe, and liquid after 1 year, only 3 mo penalty if cashed before
five years. They also are tax free if used for college expenses ..... but
you need to hold them in your name.

As for PenFed, have you considered setting up a joint account with your
daughters? It looks like you have earmarked 100k for them in a money
market anyway. If this is for college expenses you could buy a 4-5 year
CD with the idea of helping them payoff their college loans when they
graduate. This would give you more flexibility and control over the money
during their college time. You would also collect about 5k per year to
help with incidental expenses. I believe a joint account in addition to the
current account you already have would qualify for additional insurance,
probably up to 300k ...... but call PenFed to make sure.

I am very sorry for your loss. You are going through a venerable time right
now so stay away from financial advisers ..... at least until after you
have learned something about investing and know how to ask the
right questions and sift out the B.S.

Cheers,

Charlie
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Re: please help ... widow's porfolio
Old 06-28-2005, 01:05 PM   #19
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Re: please help ... widow's porfolio

Quote:
Originally Posted by charlie
As for PenFed, have you considered setting up a joint account with your
daughters?*
Charlie, when I googled PenFed a while ago it seemed it was a military credit union so I never read any further. Are Penfed CDs available to the general public?

Art
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Re: please help ... widow's porfolio
Old 06-28-2005, 01:17 PM   #20
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Re: please help ... widow's porfolio

Art, anybody can invest in PenFed by joining the National Military
Family Association (NMFA) and paying a one-time fee of $20,

Check this link on the PenFed web page:.

https://www.penfed.org/membershipApp...elig10.1.1.asp

Cheers,

Charlie
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