There’s a virtual certainty for couples. It’s sad to think about. But it’s a reality nevertheless. It’s that one partner will likely pass away before the other.
Why bring up such sad news?
Because, as Steve McDonald explains over the next two minutes, if you manage your own money, your surviving spouse could have a big problem if they don’t understand finances. However, there’s a solution.
Transcript:
There is one virtual certainty for couples in retirement. One of us will check out before the other. I know it is not a pleasant thing to think about. But it is our reality.
And, if you manage your own money, and you’re like most couples – where one understands money and manages it, and one, well, doesn’t understand it – the surviving spouse could have a big problem if he or she is the one who doesn’t understand.
But managing your own retirement funds when you have either been out of the loop or you just don’t understand money – which is more the rule than the exception now – can make one of the most difficult transitions in life a financial problem, too.
Yes, I know, engaging the half who isn’t involved in the money decisions is a daunting task. My Eileen has her pat answer to any money question I ask her, “You handle it.” You, of course, is yours truly.
Now, here’s where I am supposed to say, yes, you have to make him or her understand it and get them involved. Trust me, they either can’t or won’t, or they would have done so by now.
So let’s try another approach.
Here’s an idea to make the transition easier for the surviving spouse. In fact, this is what I did.
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I moved our money to a full-service broker/advisor, one of the Pillar One brokers The Oxford Club lists for its Members. Don’t ask; I can’t tell you which one. Federal law prohibits it. It would be seen as a recommendation. I can’t do that.
My deal with this broker is I make all the decisions; he processes all the trades. Yes, it costs a little more than an online broker. But if something happens to me, he can step right in and continue what I have been doing.
And Eileen already knows him well and trusts him. The broker also knows exactly how I want things handled.
Obviously, you don’t have to use the Pillar One folks. You can also ask family, a good friend or even someone in the money business for recommendations.
I would avoid banks for a couple of reasons. But that’s for another time.
Meet with the broker and interview him or her. Ask a lot of questions. Prepare them ahead of time.
And as I used to tell my prospective clients when I was a broker myself, have an attorney or an accountant there to assist you. It will be well worth the few bucks it’s going to cost you to have their help. You can meet in their office.
And negotiate the fees. You’ll be making all the calls until you pass. So it should not be his full rate.
Yes, it’s a little more work and a little more money. But believe me, you’ll rest easier knowing your partner is well cared for.
And if all you do is avoid one costly mistake, it’s going to pay off many times over.
Don’t drop this huge responsibility on someone who is unprepared.
One word of caution: If your friend recommends their son or a cousin or a relative who they say is just great with money, make sure you move on. They may very well be fine. But your friend’s objectivity is out the window.
Good investing,
Steve
Editor’s Note: Having access to over a dozen vetted Pillar One Advisors is just one of the benefits of being an Oxford Club Member. Another bonus is having the opportunity to attend the Club’s popular financial seminars and events.
For example, in September, Steve McDonald, Marc Lichtenfeld, Matthew Carr, Alexander Green and others will present their top new income strategies for getting paid 12% or more on your money at The Oxford Club’s Private Wealth Seminar in Southampton, Bermuda.
If you’re a Club Member, simply click here for all of the details on this event. If you’re not a Member yet, go here to discover the benefits an Oxford Club Membership provides.