THE NORTH PLATTE TELEGRAPH
HAVE YOU PLANNED AHEAD FOR MOM?
becomes impaired or passes? Can Mom manage the finances? Does she know where the investments are? Does she even know who the agent or planner is? I’ve worked with many clients who lost husbands, these ladies are shocked to find out the following: She didn’t know that his pension plan would be eliminated upon his death. Some terminate upon the owner’s death, others pay a portion to the surviving spouse. You both need to know what you have. 2. She didn’t realize that of the 2 1. social security checks coming in-one would be eliminated upon his death. She’ll be able to keep the larger of the two but she has to make a choice. 3. Where are the assets such as the retirement accounts, IRA’s and what are they invested in. Are they in the stock market, bond market, are they at risk? If the stock market took another dive like in 2008 or more recently in 2020, could the investment lose 30% again? Is it in safe, protected diversified investments? 4. Who is the financial planner, who is the insurance agent, who does your taxes? 5. Is there a life insurance policy? If so, does the family know where it’s at? Across the country, over $1 billion dollars is unclaimed, mostly in life insurance policies that family members didn’t know about. Here are two examples of what could happen: Bob (age 65) and Marge (age 64) were finally retired. They had worked hard all their lives and felt that they were going to have a comfortable retirement. After all, Bob had $2000 from social security, and $1000 from his pension coming in monthly. Marge
took her social security early and brought in $600/month. They also had $200,000 in an IRA that was in a mixture of stocks and bonds. Bob had worked with the investment advisor. They were pulling out $400/month out of that investment. All combined, they had income of $4000 per month. That was comfortable… All was well until Bob died of a heart attack at age 67. Marge was shocked to discover that Bob’s pension was terminated at death, one social security check went away together resulting in a reduction of $1600 per month. She also found out that their IRAs were in stocks and bonds totally exposed to the stock market. That also took a dive resulting in a loss of $60,000 that year. She wasn’t happy with their investment advisor-she didn’t understand him and was embarrassed to ask him questions. They were comfortable with income coming in at $4000 per month before Bob died. Now she was left with $2400 per month-it was very tight. And what happens if she lives another 20-30 years? What happens if she takes more out of their investment accounts, what does that do to her taxes? Who does the taxes? Marge was in a pickle!
Marge to the appointment to ensure that Marge and the agent knew that at his death, he wanted to make sure that the policy paid out tax free and would be rolled into an annuity that would pay out for the rest of Marge’s life. This would replace the $1600 that would be eliminated at his death. He also introduced Marge to his investment advisor and accountant. She needed to become familiar with their assets and tax situation. He also realized that being totally exposed to the stock market would put their lifetime savings at risk so once he retired, he looked for more secure, protected assets a blend of CD’s, annuities, and some mutual fund accounts and he got Marge involved in selecting those assets. He even planned for their Long-Term Care buying a hybrid annuity/long term care policy so that if either one of them needed long term care, the policy would protect their remaining assets. In addition. Bob wrote everything down in a planner workbook and made his family aware of the location. He updated it every year at tax time. How much more comfortable is this scenario? As we go through this month of May, let’s protect the Moms in our family. Nobody wants to think about death but if we want to protect our loved ones, it’s a good time to think about…what happens if Dad dies before Mom? If you’d like a family planner worksheet or would like additional information on planning for the future, call Rebecca Nordquist with Phares Financial Services at 308-532-3180 or email RebNordquist@msn.com.
By Rebecca Nordquist, RD, MHA, CLTC
We just celebrated Mother’s Day, so it is a good time to do some planning for our Moms. In your retirement planning, have you thought about what happens to Mom if Dad dies first? Women usually live 5-7 years longer than men and usually the surviving spouse is financially worse off. Half of women who reach 65 will live beyond 85 so planning ahead is critical to ensure that the finances will last the 20+ years. Inflation is a factor. It has averaged 3% per year in the last 20 years which means that a comfortable $50,000 per year will require $90,000 per year in 20 years to ensure the same standard of living. Finally, if health issues start to decline, women are less likely to have someone able to take care of them because their spouse has already passed. So a major question is…if Dad goes first, does Mom know where the assets are? Many women leave the financial planning to the husband. That may work fine when Dad is alive and well but what happens if Dad
Here’s what can happen with some planning:
Before he retired, Bob had called his pension plan to find out what happens if he died before Marge and discovered that the pension terminated. He also knew that their social security income would be reduced to one check. He wanted to be sure to replace that income so he bought a $250,000 life insurance policy for $150/month. He brought
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