Planning for non-DIY spouse

[Which Roger]

Quote:

Originally Posted by youbet Yeah, that'll help a lot........ She'll get advise ranging from go 100% fixed to 100% equities and from ultra conservative to ultra aggressive withdrawal rates....... She'll be told to use an advisor and to DIY. Folks with real life experience will suggest totally opposite strategies that have actually all worked out for them, or so they say. She'll meet fringe thinkers and herd followers. Ya might want to warn your DW that there will be diverse opinions from people who are all positive they are 100% correct and that their way is the only way. I learn a ton from this forum and enjoy participating, but I'm not sure I'd tell my DW to post our financial info and then follow the advise unless she knew far more of the basics than she does, had more personal interest and had her own developed opinions on the various strategies. She'd hear a lot of great ideas from bright folks but might not be able to sort the wheat from the chaff.

Good points. The document would have to make the current strategy very clear, then say that this forum should be used to answer questions about that strategy.

[FANOFJESUS]

What do you think of this idea REWahoo?
Might also work for folks with all money in taxable in the 15% bracket or lower.
Invest all IRA amounts (the combined total of both our IRA accounts) in two Vanguard Funds: Invest all IRA amounts (the combined total of both our IRA accounts) in two Vanguard Fund: Target Retirement 2015 and money market fund (VMMXX)
Put approximately $75,000 in the money market fund (VMMXX). Then transfer 75k to the local credit union money market (Makes more at the local credit union than Vanguard). This will be the account used to fund monthly transfers to your checking account.. This will be the account used to fund monthly transfers to your checking account.

Through Vanguard, set up the Target Retirement 2015 accounts to have dividends (paid quarterly) and capital gains (paid annually) go to the money market account.

Also through Vanguard, set up a monthly transfer of $ x,xxx to your checking account. This, plus your SS and (small) pension will provide your monthly income.

When the balance of the money market fund decreases below $40,000, consider selling shares of Target Retirement 2015 to 'top up' the money market account to $75,000.and a money market fund.

[REWahoo]

Quote:

Originally Posted by rec7 What do you think of this idea REWahoo?

Looks good to me.

There are a number of Vanguard funds you could use to do what I'm trying to accomplish - one of the Target Retirement funds or another balanced fund like STAR would do the job. Choose the fund with your favorite flavor of asset mix, just be mindful of the fund's expense ratio.

I stuck with Wellesley and Wellington using the old 'dance with who brung you' approach.

[haha]

Quote:

Originally Posted by Which Roger Good points. The document would have to make the current strategy very clear, then say that this forum should be used to answer questions about that strategy.

I think that might be risky. People on this forum come and go, and they all are mortal, therefore the quality of the advice that she might get could be very different than the read on it that you get now.

I've known of very successful men who left a big portfolio along with an admonition to never sell any of it. I know of at least one instance where this was very good advice. Well known Dallas oilman and onetime mayor of Highland Park, Ashley Priddy, instructed his wife that in the event of his death, she should never sell the Sabine Royalty units that he had spun out from Sabine Corporation. Somebody down there told me about that in 1983 or 84. I think Sabine Royalty was about 15 years old by then. I looked at the 10-k and figured it would not be long until the reserves are all produced, so I made no action. An example of how a little knowledge can be a very bad thing. 30 years later after a unit holder has received multiples of his original investment, SBR still has good reserves and still likely has a bright future of sending out checks to the holders. But I think this is the exception that proves the rule. If I had a wife, I think I would do something similar to Wahoo, or perhaps using large index funds.

As far as annual draw, I read an interesting idea in AAII. They suggest doing what the IRS does with IRAs. Annually withdraw an amount equal to the prior years ending balance, divided by one's remaining life expectancy as defined in the annuity table used by IRS for this purpose. I think this might not be safe if started too early, or if used with an AA that was quite volatile. But it should be OK otherwise.

Another very important thing is to have a trustworthy person look over the loved one's shoulder to help avoid any fraud or larceny being perpetrated on him or her. For me this person would usually be limited to a son or daughter that you are very confident in.

Ha

[youbet]

Quote:

Originally Posted by haha Another very important thing is to have a trustworthy person look over the loved one's shoulder to help avoid any fraud or larceny being perpetrated on him or her.

I do this for a buddy's widow. She gets advise/help from a program Fidelity offers which, IMO, isn't excessively expensive and simply rebalances her portfolio to be compliant with a model appropriate for her age. It's all low cost funds. She sends me a copy of a statement quarterly and I send her a few comments. So far, after 7 years, it's all been straight forward and vanilla. The toughest thing was keeping her calm during the recession.

I'm really glad for the Fidelity arrangement. If she was using an independent advisor of some type, it would be more likely I'd have to question some activities or lack of activities.

[Alan]

I've done something very similar to REW, and the printed instructions are with our wills, including a list of other instructions of who to inform etc. (Pensions, banks etc). We've gone over the instructions together so I believe she understands. I think she will struggle with the taxes though and may need to use a tax preparer. (I have foreign pensions and bank accounts)

[48Fire]

Quote:

Originally Posted by Hamlet I've taken the lead in our investing as a couple. I'm very comfortable with managing our investments, but my wife is less so. If something were to happen to me, I think that she would want a financial planner type to help her with things, even if it meant reducing her returns to pay for the help. My former manager of 15 years has recently gotten into financial planning, and now works for Thrivent Financial. I think he is well suited to the profession, and I think he would give her good advice and handle her money very carefully, albeit with a higher fee structure than I would like. I'm considering giving her instructions to call him in the event of my death. Does anyone have a better alternative for this situation?

I told my wife to log on to ER forum, she may even meet some rich guy there.

[Which Roger]

This discussion is making me realize how important it is to keep one's portfolio simple, with a minimal number of accounts and funds. During working years, that's easier said than done, since we are locked into our employer's 401(k), don't want to touch taxable accounts due to being in a high tax bracket, etc. But there's more flexibility in ER, so I think I will make simplification a priority after I pull the plug.

[fritz]

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Originally Posted by packrat44 Good reminder to put instructions in a written format that are easy to understand and follow. Spouse is not interested in the process, but she is interested in the end result.

+1 (and keeping that document applicable)

We retired early and had written guidance for B/4 59.5 and after, for the "what if" scenario. We are now coming up to eligibility for SS (60/62), and have revised the written guidance to remove all B/4 59.5 instructions.

Personal goal was (2) pages, forcing me to keep it simple and straightforward so it wouldn't be ignored by spouse. It's less than two now, but original was just under three. This was a challenge considering the changes required when it becomes necessary (accounts/property ownership, beneficiaries, SS, etc.) along with where the money comes from, and how to maintain it going forward.

[H2ODude]

I'm in similar situation, DW not interested. My instructions are to consult with son who is very like minded and doing better now than I at his age (well, he's not married and doesn't have two kids either!). OTOH could have her get with extremely successful SIL; he's probably already got 10x our net worth now. Trust him and daughter as I do son to do what's best for DW when I'm gone. Just not comfortable with his approach to finance (in private equity and venture cap). I know son would keep DW in conservative approach, mainly index.

I've thought of the written "do this in all cases" approach, but things can change, and I think a trusted advisor who's tuned in to the world of personal finance watching over things is better than prescribing a fixed plan. My opinion. (I got lots!)

[Greg V]

This topic is also close to my heart as DW is capable, but has not had much interest in investments, etc. and would probably not feel confident handling this stuff solo.

Good ideas throughout the thread, but we have no children and siblings are not very investment minded, so there are not any obvious family choices for support and advice.

I'm working on education and will leave detailed information, but have a feeling that, without DW having confidence in her ability to make these decisions, the "plan" will be of limited use, especially as time passes.

While I don't like the idea of paying a RIA to do financial tasks I believe I can adequately handle, I also wonder if it's not a good idea to establish a relationship with a firm and person while I'm still around to vet their background and ensure DW will have an ethical and trustworthy financial advisor after I'm gone, as well as reasonable value for the costs.

I'm not taking any actions...just pondering the options. I appreciate the chance this thread gives me to get the views of others who may be in a similar situation.

[samclem]

Quote:

Originally Posted by Which Roger This discussion is making me realize how important it is to keep one's portfolio simple, with a minimal number of accounts and funds. During working years, that's easier said than done, since we are locked into our employer's 401(k), don't want to touch taxable accounts due to being in a high tax bracket, etc. But there's more flexibility in ER, so I think I will make simplification a priority after I pull the plug.

I don't spend a lot of time compared to some people on portfolio management, trading, tax optimization, etc. And some of the time I do spend probably has limited marginal utility--it might result in a couple of hundred dollars in extra monthly spending capability down the road. If I'm gone, DW's expenses will go down a bit, so that last bit of fine-tuning (e.g. tax-loss harvesting, etc) is less important. Of more importance is helping her stay away from the sharks in the "investment management" business, and away from knee-jerk reactions to the daily news that could result in big mistakes. So, I'm favoring the idea of a simple plan that gets the big stuff right, and which she understands well enough to have confidence in it for the long haul. Advisors change companies (leaving their clients behind) or get out of the business, and would cost her a lot over time.

[Sue J]

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Originally Posted by H2ODude I'm in similar situation, DW not interested. My instructions are to consult with son who is very like minded and doing better now than I at his age (well, he's not married and doesn't have two kids either!).

Our older son (29 next month) is who I consult with on investing and the economy in general. DH knows that he's the one to turn to if I'm suddenly gone. Nice to know someone takes after me!

[Brat]

The reality is that investment judgment decreases with advanced age. DH & I are blessed in that we have a child who can pick up that responsibility with ease but there may be a period when DH or I have lost our edge but not our marbles (so to speak). With that in mind I have tried to simplify our investments so that they drive themselves, our major IRA holding is Wellesley and our LTC insurance is paid-up.

[Rustward]

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Originally Posted by Which Roger This forum is an excellent source of unbiased, free financial planning. So maybe the way to go is to summarize in a page or two assets, accounts, and investing/spending strategies. And at the top of the first page, say "when I'm gone, log in to the ER forum using this username/password, tell them the situation, provide them this information and ask for help".

Quote:

Originally Posted by Which Roger Good points. The document would have to make the current strategy very clear, then say that this forum should be used to answer questions about that strategy.

Quote:

Originally Posted by haha I think that might be risky. People on this forum come and go, and they all are mortal, therefore the quality of the advice that she might get could be very different than the read on it that you get now.

Rely on an internet forum? Really? I am with Ha on this one. Who knows if this forum will be here in 5, 10, 15, 20 years, when the widow(d) spouse will need it. And what will the makeup of the forum be at that time if the forum even still exists? Then what? What if the spouse posts "SO died and I have to do it all now . . . so what do I do about . . . xyz . . ." and they get one reply that says sell everything and go to cash or gold, and the spouse follows through without further research?

Consider the spouses who have avoided handling any personal financial business and deferred to the spouse who has passed (I know, probably not the norm for the forum members here, but probably valid for some of them). The surviving spouses' lives are literally turned upside down. They have a tremendous loss with which to deal, and somehow have to figure out how to continue on with their lives -- figuring out how to do things they never had to do before. Some of them are challenged to even write a check to pay the water bill without assistance. Are they going to log on to Vanguard or Fidelity and and trade securities? I doubt it.

I guess I am saying you also need a plan B -- which, in addition to handling a spouse who is not used to handling financial transactions, also covers the surviving spouse who may be unable to do financial transactions, or who reaches a point in life where they are unable to make financial decisions.

It is not as easy as just leaving instructions; you also have to cover the situations where the instructions cannot be followed -- for a variety of reasons.

[PatrickA5]

I'm not sure what I'm going to do as my DW has shown zero interest in our finances in our almost 35 years of marriage. Over the years, I've suggested that we sit down and go over our expenses, accounts, investments, etc. but it's like pulling teeth. It's not that she wouldn't understand a lot of it, she's smart, (her last several jobs have been high level accounting/finance positions) - it's just she figures I'll take care of it and she doesn't want to mess with it.

Lately, I've just given her a quarterly net worth statement that shows all of our accounts, where they're located and the total amounts. As long as the TV, Ipad, and Iphone are off, there's a decent chance she'll make it through the one-page statement without finding something better to do.

[Brat]

I think she will step when you cannot.

Your comments made me think of the division of responsibility in my marriage. There are many things my husband does that I could do (maybe even better) but I step back because I want to avoid a conflict of egos.. and I assure we have those.

[aja8888]

Great discussions and some good plans. Two family members passed in the last 5 years and their spouses were left with a good deal of assets and detailed plans for going forward. All went well and they re-married within a couple of years. Now the new spouse(s) are managing the distribution of the assets.

Not everyone plans for a widow(er) to remarry, but it does happen quite a bit. It's not something to plan for though.

[Mulligan]

Quote:

Originally Posted by aja8888 Great discussions and some good plans. Two family members passed in the last 5 years and their spouses were left with a good deal of assets and detailed plans for going forward. All went well and they re-married within a couple of years. Now the new spouse(s) are managing the distribution of the assets. Not everyone plans for a widow(er) to remarry, but it does happen quite a bit. It's not something to plan for though.

Always pleasant thoughts to ponder... Thinking about the spouses new partner to be and him/her spending all the money. One of my friends is not too keen on saving additional money as they already have generous pensions. He says he should spend it while he is alive, as she would remarry anyways then he would blow all his money anyways.

[brett]

I/we have not left any financial instructions to be followed after my/our death. Circumstances and markets can change too quickly for that.

We have a one page document outline where the monies are and what the approximate balances are. This is updated once per year. It includes the contact data for our investment counsel, tax accountant, location of will and safety deposit box. We also arranged our affairs in such a way as to minimize tax-income and estate tax. In our jurisdiction gifting is not an issue-we can do it when and how we like with no tax consequences.

The investment advisor and accountant will carry on as before-providing timely recommendations and sound advice.

Finding a new investment advisor was part of our plan for early retirement. Apart from the usual requirements, I wanted someone who my spouse felt comfortable with. It took us a good six-nine months to find the right fee for service advisor.

DW is good to go if I fall off my perch.