If your spouse was not knowledgable about investing and you were going to give him/her advice about how to invest the proceeds of your life insurance, and you wanted/needed some very basic advice, what would you say?
My wife is hands-off when it comes to investing, so I've already advised her about moving all retirement savings to an appropriate Target Retirement Fund (in her case, 2040) if I died and wasn't around to manage the asset allocation anymore. The plan is that the retirement accounts would kick in around 2040 and last her through retirement.
As for the pre-retirement income (i.e. life insurance and other short/mid term savings) I may at some point decide to create a trust to handle the investment aspect of things, and of course she could always consult a financial advisor, but for now, assuming she'll need to invest the life insurance money on her own, what would be your simple back-of-the-envelope suggestion as to where that money should be invested? The key is keep it simple -- even if it's not ideal, there's a a better chance that simple advice will be followed and worse mistakes (hopefully) avoided.
Again, starting in 2040 (when she's 60) our retirement accounts will be accessible (and even at their current balances should be sufficient to last through the end of traditional retirement). They question here is how to make the life insurance and other assets last until 2040.
Ideally, the advice is a "set it and forget it" thing, where she can make one investment decision up front and then take a very hands-off approach.
My current thinking is to advise as follows:
To provide income until 2040, if I were to die between ...
Please poke some holes in this advice. What would you do differently? Am I thinking about this all wrong and is there another simple strategy I could advise? Or do you think the general concept is OK but there should be some tweaks I should make to the fund recommendations?
I know that there's no substitute for having someone actively managing the assets and making sure that the money is appropriately invested at all times, but if you had to give this sort of advice as a worst-case-she-has-to-invest-it-on-her-own-and-probably-will-never-become-investor-savvy thing, what would you suggest to your spouse?
My wife is hands-off when it comes to investing, so I've already advised her about moving all retirement savings to an appropriate Target Retirement Fund (in her case, 2040) if I died and wasn't around to manage the asset allocation anymore. The plan is that the retirement accounts would kick in around 2040 and last her through retirement.
As for the pre-retirement income (i.e. life insurance and other short/mid term savings) I may at some point decide to create a trust to handle the investment aspect of things, and of course she could always consult a financial advisor, but for now, assuming she'll need to invest the life insurance money on her own, what would be your simple back-of-the-envelope suggestion as to where that money should be invested? The key is keep it simple -- even if it's not ideal, there's a a better chance that simple advice will be followed and worse mistakes (hopefully) avoided.
Again, starting in 2040 (when she's 60) our retirement accounts will be accessible (and even at their current balances should be sufficient to last through the end of traditional retirement). They question here is how to make the life insurance and other assets last until 2040.
Ideally, the advice is a "set it and forget it" thing, where she can make one investment decision up front and then take a very hands-off approach.
My current thinking is to advise as follows:
To provide income until 2040, if I were to die between ...
... 2009 - 2020 = Vanguard Target Retirement 2010 (52/48 stock/fixed)
... 2020 - 2030 = Vanguard Target Retirement Income (30/70 stock/fixed)
... 2030 - 2035 = Vanguard LifeStrategy Income (25/75 stock/fixed)
... 2035 - 2040 = Vanguard Inflation-Protected Securities (100% fixed)... 2020 - 2030 = Vanguard Target Retirement Income (30/70 stock/fixed)
... 2030 - 2035 = Vanguard LifeStrategy Income (25/75 stock/fixed)
Please poke some holes in this advice. What would you do differently? Am I thinking about this all wrong and is there another simple strategy I could advise? Or do you think the general concept is OK but there should be some tweaks I should make to the fund recommendations?
I know that there's no substitute for having someone actively managing the assets and making sure that the money is appropriately invested at all times, but if you had to give this sort of advice as a worst-case-she-has-to-invest-it-on-her-own-and-probably-will-never-become-investor-savvy thing, what would you suggest to your spouse?