Bogleheads

[livestrong_fighter]

I was diagnosed cancer last November. And there is very good possibility that I could die at young age. We have two kids under 5. My wife is in her middle 30s and she knows pretty much nothing about investment. I am trying to find something really easy for her to manage if i can't make it. I want her stay home and take care of kids until they grow up.

If I can't make it, she will get my life insurance payout. After paying off mortgage (a moderate house, should be enough for them if they do not want to move), she and kids would still have 1.2M. I hope this 1.2M will last a very long time (20 years hopefully, until kids grow up and be entirely on their own and the rest of my wife's life). I hope there is a way she will not touch into principal, or use as little as possible of it until kids go to college. By the time kids are in colledge, I don't know what kind of tuition we will be talking about. But I hope even by paying tuition, the rest principal still could support her for long period of time. (she sure can work again, but thats something out of plan now. Taking care of two kids, thats more than one job already.)

Besides this potential 1.2M, we've also saved 200K in our retirement accounts. This sure can be the money for her when kids are entirely on their own and she in her late 50s.

This is a tough call for me, but if you guys were in my shoes, what would be your plan? I'm looking for something with least risk and potential maximum return for them.

Go with fund like PTTRX, HABDX would give around 7% return if everything goes as expected. But are there other better options available? I can't let her put all money in one place, it has to be diversified.

I posted this on finance yahoo and a guy told me that I will get more well thought answers and here I am. Please note that my wife knows little about investment.

I thank you in advance for all your thoughtful post! I will be answering any questions you have.

Thanks again!

[EmergDoc]

Good job buying a big chunk of life insurance. Note to others reading-$1.2 million doesn't seem all that much anymore does it?

This money will take care of things for a very long time, especially if your wife is reasonably frugal and invests it reasonably well. Will it take care of her for the rest of her life and put your kids through college? Probably not. She should probably plan to go to work, at least part time, again at some point, perhaps after the kids get into school. But this'll take care of a good ten years no problem and put her through school if needed to get an advanced degree which will allow her to take care of the rest.

I suggest you have your wife read the chapter in the Boglehead's guide to retirement on windfalls and the chapter in the only investment guide you'll ever need (Tobias) on Windfalls. She needs to realize in a hurry that if you die here soon she will have two very important jobs. She will need to take care of the kids which will be stressful and time consuming and she will need to take care of that money, which does not need to be stressful nor time consuming if she puts in a little time upfront and develops a reasonable, simple, investing plan.

Sorry bout the cancer. Good luck fighting it off. Perhaps she won't need this advice for a long time if all goes well.

P.S. Read up on the concept of a safe withdrawal rate-it basically suggests your wife can only spend ~$36K per year if she wants this money to last the rest of her life.
_________________
1) Invest you must 2) Time is your friend 3) Impulse is your enemy
4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

[Culture]

Sorry to hear about your position, but I am glad to see that you are making plans for the future. I have the same concerns about my spouse's abilities to handle our investments if I pass away first. While my spouse is intelligent and well educated, she in not interested in the details of investing (as I say, she does not have the passion for this that I do).

Our plan is for her to use a fee only adviser if I pass away. I have managed to educate her with respect to big picture issues. This education should be adequate to understand if the advice she is being given is semi-reasonable. We have a comprehensive IPS for her to refer to, and we have discussed options for retaining a competent adviser, although we have not actually identified one at this time . Given your assets, you will be able to engage a reasonable one.

One of the things I think people here do not understand is that everyone does not have the interest, intelligence and education required to be a successful investor. Dumping 1.4M on your wife, if she does not have a passion to manage it, is a receipt for failure. No plan you create today is going to work for the next 20-50 years years (I assume you are around 35). Things change. I think that the $2000-$4000/year you would spend on this would be well worth it.

I would also strongly consider setting up a family trust to protect your assets from any future second spouses. This is what we have done, as we are both realistic that if either die we will probably remarry (we are 45). This idea is that she/I are in full control of the trust, but it is protected from divorce with any second spouse, and passes to our kids, not the second spouse, in the event I/she dies before the second spouse.

Good Luck.

[donocash]

Wow, that is a tough situation. I hope that you can survive your cancer, and the following advice is unnecessary.

Right now, I think the highest priority would be to polish your wife's job skills. That is always an excellent investment, and that's how I would think about it. I think it's unlikely that 1.4 million would raise a family, put two through college, and last your wife for fifty years, assuming she could easily live into her 80s or beyond. Once the kids are school age, it is difficult but certainly possible for a single mom to hold down a good job with after-school programs and such. A steady job income from your wife which keeps up with inflation would be the best protection for your family.

I know this is not what you might hope for. But, it's way easier to reenter the job market in your thirties than in your fifties, if the money runs short. I'm not saying that your family couldn't live on what you might leave behind. I just think that would be a high-risk plan.

Also, you mention that your wife knows little about investing. That should start to change today. It's not difficult to learn, that should be emphasized. A few basic principles, easily learned here, will go a long way. It's not what she knows about investment, it's what she can learn. Motivation is key.

Whatever you decide, I hope my advice becomes moot.

[bearwolf]

[G12]

Sorry to hear of your diagnosis and I wish you the best. In addition to the portfolio driven income do surviving spouses/children still qualify for SS benefits? I am unfamiliar with the current status, but a friend of mine was receiving benefits into college due to his father's passing.

[mark500]

Damn. Very sorry about your situation. What to do about it.
First, I suggest you contact an estate planning attorney to make sure that your estate would be handled properly (if it comes to that) , and your kids and/or and wife receive assets according to your wishes. It will cost a little, but I suspect it will be worth it for the peace of mind.
If your wife has low investment experience/ability, I suggest you use a corporate trustee such as vanguard's to manage the money or created trust.

[theduke]

If you have enough social security credits to qualify your family for survivor benefits, your wife and kids can receive social security untill the kids are 18 or so I think.

[thedude]

Others here will give you far better advice than I can offer. But I just wanted to chime in to wish you good luck. Take care.

[bottlecap]

Livestrong:

I'm sorry to hear about your diagnosis. How courageous to spend your time now providing for your family's future. Please keep fighting, it is definitely possible to pull through, so please keep that in mind. My family has had a lot of experience with cancer. It is terrible but not necessarily unbeatable.

With respect to your wife and family, $1.2 million puts them way ahead of the game, but as you've gathered, comes with no guarantees. Several things come to mind:

1. Are you sure your wife can't get an interest in the subject by your special request? Necessity is as powerful thing. She doesn't have to like it, she just has to understand it.

2. If she can't or won't, the two best scenarios I see are to annuitize the life insurance proceeds through Vanguard or some other low-cost provider or set her up with a fee-only advisor you trust while you're still here. Several post on this site. Rick Ferri (Portfolio Solutions, I believe) is one and Larry Swedroe (Buckingham Asset Manaagement) is another. Set her up with someone you trust to give her good advice if you are gone.

3. You might counsel her to do some combination of each.

Good luck and God Bless,

JT

[Stevewc]

Hello livestrong,
Even though this group may not give you the perfect, quick and easy answers you would like to have, keep reading and coming back here. You will start to put the puzzle together as everyone puts in their 2 cents worth. I have told my spouse if anything ever happens to me that she should feel comfortable coming to this forum and asking any questions she might have. There are so many fantastic folks on here that even if she got bad advise there would be 10 to 20 people that would respond and straighten the bad apple out. That's just the way this group is. I have full confidence that she would be treated with respect and given the best advise possible.
Steve
_________________
Ladies and Gentiles
Monkeys and Reptiles
I come before ya, to stand behind ya, tell you something I know nothing about !!!

[livestrong_fighter]

First, I want thank you for everyone's post. No matter if it is a piece of advice, or just something you said to cheer me up. It means a lot to me, THANK YOU!

to EmergDoc, My wife is frugal and smart and has master degree. She will have no trouble finding a job. She even wanted being a stay home mom last year but her company liked her so much and even offered her flexible part time with full benefit. But she is never interested in managing our finance just like Culture's wife. LOL, I did all finance planning (good or bad, who knows. LOL).

I have no problem with her getting re-married if I can't not make it. I will just tell her to get prenuptial and trust setup before doing so. But I really doubt she will ever get re-married based on what I know about her.

Bearwolf, I'm glad to hear your wife's story. its very encouraging! I hope she will continue do well and spend the many years ahead with you!

About the SS benefit thing, based on their website, (sorry that I am not allowed to post any web site address yet.)
it looks my wife would be eligible if I can't make it. ("A widow or widower at any age if he or she takes care of the deceased's child who is under age 16 or disabled, and receiving Social Security benefits). But I am not able to find out how to calculate. Has anyone had any experience?

As we have two pre-K children, a mortgage. With my illness, current time is our hardest time (physically, emotionally and financially). In 3.5 years, both kids would be in school and the financial demand wouldn't be that much by that time. If we do not include mortgage and pre-K tuition, we can live on $4500/month at today's dollar, nothing luxury but relatively comfortable.)

About consulting a financial advisor, I don't know what to say, with LEH, Madoff and Sanford, I intend not trusting anyone completely, especially when I see some of the kids advisors are even 5-10 years younger than me, I am just feeling uncomfortable letting them taking care of my family's finance. I would rather come here and ask for everyone's opinion and thoughts.

After reading the posts, I think following would be my plan:

If I can make to the date that both kids are in school (in 4 years), then, my wife could continue work as "donocash" says, it will be difficult, She could work for another 10 years or more while managing the money, this seems more realistic.

If I can't make that far, then, staying home until both kids are in school and start to look for a job again seems more realistic to them.

Either way, seems she will have to work, at least for quite some time.

Meanwhile, I will fight as hard as I can to be a survivor, I do not want my kids grow up without father. That’s priceless. I thank you for your well wishes!

This is a really nice forum, I like everyone's post, so many people have a lot of care! I will be here quite often and hopefully you will see me here for many years until I really retire.

Bless you all!

[rainyday1]

Hi Livestrong,

I hope you are able to beat this. You and your family will certainly be in my thoughts and prayers. I always believe if you are prepared for the worst, it's much less likely to happen. I hope if you and your wife develop a great game plan, you will never need to implement it.

My husband and I have two kids under 5 also, and I have spent a good deal of time trying to figure out what my best course of action would be if something happened to him. It sounds like your wife is significantly more employable than I am, so she would be in a better position there.

As for the SS calculations, if you have your last annual statement laying around, it will give the amounts your spouse would receive.

If you will have 1.2 million after the mortgage is paid off, what if you put that money in something like the Wellesley income fund (VWIAX)? The Admiral shares are currently trading around $50/ share, so she would be able to purchase 24,000 shares. Last year it paid $2.20 a share in distributions, so it would generate $52,800 in cash for her to live off of. With the SS income, it should put her pretty close to the $4500/ month figure. If she did have a shortfall, a part-time job would probably give her what she needed to make it up.


If I were in your wife's shoes, I know my main concern would be cash flow. I know Wellesley is a very conservative allocation (67% bonds, 33% stock), but it might be a way to maximize cash flow and get some return without risking too much principal. I know the distributions would be taxable, but she may not owe much with two kids and significantly less income.

I'm sure others will have better ideas, but I thought this might be a simple, reasonably diversified plan that would be easy for your wife to manage.


Best wishes,
rainyday

[brick-house]

Livestrong_fighter,

Welcome to the forum. Sorry to hear about your diagnosis. Your fighting attitude and spirit is awesome. Good luck and God bless.

Livestrong_fighter wrote:

[ddb]

The social security payments will be significant given that your wife will be left with two kids under the age of 16. This will greatly offset the amounts that will need to be withdrawn from the $1.2 million portfolio. It may even be possible that your wife can live on the SS amount alone. Check your most recent Social Security benefits statement for the amounts payable to your wife and children. I think the maximum family benefit is around $3,700 per month ($44,400 per year).

There may be some additional planning to consider here, particularly for the kids. Your wife might be the most responsible person in the world, but I would always be concerned about any money left behind. You may wish to leave some of the life insurance money into dedicated trusts for each child; this way the money would be protected from claims of creditors against your wife (now or in the future) as well as be protected from being squandered or swindled. Even if you just took, say $75K per child, and placed it into trusts, that could be enough to pay for each of their education and/or given them a house down payment fund or whatever. The tricky part with this is naming a competent trustee to watch over the money until it is needed.

Good luck. It is nice to see that you did some planning ahead with life insurance so that your wife will not be in the unenviable position of having to go to work every day if you pass away. It is amazing how many of these sad situations we see every day could have been greatly mitigated with some very inexpensive term insurance. Fortunately your local church/school/whatever won't need to take up a fundraiser for your family should something bad happen.

- DDB
_________________
"I know that your friends are my friends and, uh... I've thought about that. You can have 'em" - PB

[kenschmidt]

I am sorry to hear about your situation.

I agree with DDB that SSI survivor benefits will be substantial. There is a benefit for your spouse (depending on employment status) and there is a benefit for each child (independent of the spousal benefit and not tied to spousal employment). As others have mentioned, your annual Social Security benefit statement should give you these amounts.

I have wrestled through some of the same questions you have to be sure my family is adequately covered and agree with the others that the SSI payments will really help extend the life insurance you have. I think this is often a forgotten feature of Social Security, but it makes a huge difference for the people that need it.

All the best,
Ken

[TheEternalVortex]

You could annuitize part of it. That's perhaps the safest way to guarantee an income stream for life.

[dbr]

Is not an annuity usually one of the options for taking a life insurance payout? Note there are many considerations involved in making such a decision, and taking all of the policy as an annuity from this company would not necessarily be the best choice.

[jh]

...

[livestrong_fighter]

Just spoke to SSI officer about my situation, based on my contribution, if anything happens to me, my two kids will get around $750 for each of them until they are 19yr and 2 month old (assume in school), and my wife will get $2000 per month until youngest child reaches 16. Thats about $3500 per month.

This will help A LOT. With my life insurance, I'm sure even if I'm gone, they will not be worrying much about their finance.

Therefore, if I can't make it. I probably will ask my wife setup two trust for kids for their tuition and more, like maybe $100-150k each, and put them into less risky fund. The rest for my wife, I'm thinking various fund too, or maybe Mr. Buffet's newly split BRK-B? What do you guys think?

For me, the most important thing would be fighting this cancer with all my heart. Sorry guys for being so moody, as a cancer patient, the mood can change between high or low hourly depending how I feel physically during chemo, especially when you are looking at your children's most beautiful smile, it is hard.

Thank you again for reading my post!

[EmergDoc]

[mhalley]

While BRK is a great stock, I don't think many on this site would recommend it. As far as your investments go, you will need to figure out what your asset allocation should be. Since this is money that will be used to live on, you would need to act as if it is a person that is in retirement, so something like a 50/50 stock/bond or even higher bond portion. If you have 1.4 mil, safe withdrawal rate should be about 50k per year, which leaves your family with 92k per year to live on with SS until the kids reach 19. What are your current expenses?
Sorry for your health problems.
Mike

[ddb]

[snowman9000]

I did not notice if anyone else mentioned this, but there is no need to pay off the mortgage. She probably would be much better off having the flexibility and options that come with having the extra money available. I know it seems reassuring to think that there would be no debt, but more cash is a good thing too.

OTOH, if the investments don't earn more than the interest rate of the mortgage, AND there is plenty of excess cash, then paying it off looks better.

[ddb]

[fishndoc]

[sambuca08]

Also, a small aside, double-check your assumptions on the life insurance settlement. I'm no expert, but if this arrives in a lump-sum you might have less to invest / more taxes than you realize - again another reason why many people annuitize or use a trust. Best of luck

[mark500]

I cannot agree more that you need to contact an estate planning attorney.
I am not an admirer of attorneys in general, but in your situation, it is mandatory.

[englishgirl]

Hi Livestrong - I don't have much good financial advice, but I wanted to wish you well. I hope that you and your wife won't need the advice you get here, and that you are still living strong for many MANY years to come.

As someone who lost a parent at a young age, I will say that you should also be thinking of providing for who will do the work that you currently do around the house. And this might be an idea to get in place before you are feeling bad from treatments. Think about all the things that you do that your wife may need help with, and then line up a list of people she can call. Not just friends, who will be well-meaning, but who she may not feel like bothering. So, a list of a good handyman, a babysitter (after all, both you and she will want to get out of the house to have fun), someone to do the yardwork, etc. Have it all ready to go so she doesn't have to worry about finding someone good in a panic. And what about (if you can afford it) someone to clean the house and do stuff for her now. After all, she shouldn't have to worry about spending time to clean the house when she can be spending precious time with you. Or, and I'll say it, while she's grieving if you don't go into remission. There may come a time where she may not want to or be able to do much other than sit and stare at the wall. And that's OK (for a while). But it'd be nice if the house didn't disintegrate around her. We often don't think of the monetary cost of the house maintenance work that we do at home, but then when one member of the family is ill or no longer there, and the remaining people are overwhelmed, professional help can make a big difference. Our life was a bit frazzled for many years after my mom died, trying to keep up with household chores, and it would have saved a lot of arguments if we'd had someone doing the vacuuming and mowing the lawn instead of my dad trying to make us ungrateful kids do it.

Come to think of it, maybe some family counseling would have helped us too, both while my mom was ill and afterward. I think there's a desire to protect kids from the realities of cancer, and also it's just plain hard knowing what to say, but then you run the risk of shocking them if you lose your fight and they totally weren't expecting it. A professional could help with age-appropriate ways of telling the children relevant details. My mom was allowed home from the hospital for a weekend just before she passed. I thought this meant she was getting better, because no-one was willing or able to tell me it meant that they'd already realized that the treatment was not going to work.

Anyway, back to the money - personally, I think I'd look into annuitizing at least some of the life insurance money, say for a period of 20 years, not necessarily for life. I'd think that once your children are in high school, your wife would want to be working, at least part time. And after they have gone to college, she'd probably be going stir crazy if she didn't have adult interactions from a work situation.
_________________
Sarah

[TxAg]

[bigH]

Livestrong,
There are many people on this board that can help you more than I can. You should be proud of yourself that you planned well for the worst. It shows how much you care about your family.

I wish you and everyone fighting this terrible disease all the strength in the world.

[swyck]

I just want to wish you good luck, and hope you'll join us cancer survivors. There are a lot of us around, and while we're still here we're all survivors. I probably don't need to mention it but do your research and do everything you can to fight it, the odds get better every year.

[joshnluv]

Livestrong,
Sorry, nothing to add except, my heartfelt wishes for a recovery for you so that you can spend many more healthy years with that wonderful family of yours. Keep up the spirit!

[sb2010]

Long time lurker and first time poster.
Reading this thread brought tears to my eyes.

Just want to say best wishes LiveStrong!

[HarryD]

livestrong_fighter

Nothing to add on the financial front but just wanted to say I hope you win your battle. I fought hard and beat cancer 9 years ago and so can you. You will be in my thoughts while I ride the next Livestrong Challenge.

HD

[patriciamgr2]

1. You should have a living trust set up right now (by an estate lawyer) together with a pour-over will and all of the health care & finance powers of attorney. This will allow for smooth handling of financial matters should you become incapacitated as well as minimizing hassles of probate should you pass on. It's worth the money. Be sure your assets (house, investment accounts) actually get changed in title to trust (if you live in a community property state, your attorney will advise you on the most tax-efficient way to hold title to your home).

2. The key issue a surviving spouse faces with a lump-sum payout is the Safe Withdrawal Rate. People who don't focus on money often feel that $1 million plus is a lot of money--one of the best things you can do for your wife is to ensure that she realizes that she shouldn't think of the lump sum amount--she should only focus on the amount she can safely withdraw each year. Withdrawal rates often quoted in the press like 4% per year (e.g. $40,000 per annum before taxes) relate to 65 year old retirees--the withdrawal rate for a 35 year old woman who needs the money to last the rest of her life might be more in the 2% range. (You can't spend all of the earnings on your investments because you need a cushion for the years when the market goes down). There's a solid chance that your wife will need to work at some point to fund her own retirement. You won't know until you run numbers.

3. To calculate my own SWR, I started with cash flow requirements over time. I used REAL numbers (e.g. last year's expenditures) & added all of the expense increases I could foresee (e.g. any increase in health care insurance-or will your employment insurance continue to cover her & the children forever?/when will you need a new roof, new car; etc). Really identify the amounts she will need--don't just do back of the envelope calculations--for each year you want the money to last. Then, subtract social security. You now have your estimate of her income requirements year by year. Be sure to take taxes into account (e.g. is the insurance payout taxable? Don't include retirement amounts in total if she would be taking only small yearly distributions from the inherited IRA--only the yearly distributions (after-tax) would go into the cash flow analysis.
/Sites like Financial Engines.com have lots of calculators in which you can insert each year's cash shortfall & that may be helpful in (a) adjusting for inflation and (b) doing Monte Carlo simulations that plug in lots of different investment scenarios. (For example, what if she encounters 5 down years in equity markets right away--how does that impact her investments & the amount of cash she could withdraw) & different asset allocations (how much equity/debt/cash). Setting up tax-advantaged plans like 529's for the kids' education or buying Ibonds to fund college may make sense as part of your investment plan for investing the insurance proceeds depending on what tax bracket your wife will be in.


3. One strategy which I suggested to a friend of mine's widow (age 69) was to buy immediate pay fixed annuities to cover the cash needs not met by social security.(This is the kind of annuity where you pay an insurer a large fixed sum of cash & receive monthly payments for the rest of your life) Don't buy variable annuity & avoid high cost providers. I like to buy the inflation-indexed feature. IMO, your wife is way too young for these to be cost effective. When it is age-appropriate, I always suggest staying under your state's guaranty amount for each annuity, going with a highly-rated insurer, & "dollar cost averaging" by splitting the amount to be annuitized into several parts & buying at different times to take advantage of higher interest rates (which will give you higher monthly payments).

Annuitizing part of the insurance payment she may receive with the insurance company is usually an option, but (a) given her young age, the annual payout is likely to be really small, (b) often inflation protection is not included in those annuitized payments, which is dangerous and (c) you never want to have an annuity larger than what your state guaranty fund will reimburse you for should the insurer go bust--so I would be cautious about that option in your circumstances. Your wife is so young inflation is a real threat to her purchasing power over time.

4. I hope & pray you will pull through this health challenge. But, involving your spouse in planning is always a good idea. After you go through the cash flow planning, and you have arrived at an asset allocation (by determining, in essence, how much equity risk she will need to take to meet cash needs) and you have tested whether that asset allocation is something she can live with (e.g. by asking her, if your equity fund went down by --% in a year, can you stomach staying invested?), then--and only then--focus on specific investments. Simplicity is golden in this type of situation--I'd strongly suggest broadly diversified index funds (no load, tax efficient & low cost) that she can buy and hold. (For example, if Buffet retires, what will happen to Berkshire stock--will your wife have time to follow news feeds on individual stocks???) Lots of Boglehead info on this forum & on the Wiki for the two of you to choose funds. I'd strongly suggest asking your wife to draft her & the kids' Investment Policy Statement (see various posts on this)in the next few weeks & then the two of you discuss it. Include warnings against buying products from friendly insurance agency & bank personnel, etc. Discuss how much money should be kept in cash reserves & what the right fund is to hold those funds. Consolidate all your accounts to the greatest extent possible & have all paperwork in a binder with the IPS, the cash flow analysis (which is the family's new budget), etc. Once you get all of this financial planning out of the way, you can focus entirely on your health.

I am pulling for your total recovery, so keep in mind that none of this is wasted effort. I have these documents in place right now despite no health issues. Although none of us is getting off the planet alive, my hopes and prayers are that my documents and yours will remain on the shelf for many years to come!!!

I have seen widows of business colleagues squander nest eggs by listening to "advisors". Remember, your wife adores you & will be traumatized by your loss. Her concern will be for the children. Sharks feed on situations like this--the more the two of you have planned, the easier (and safer) it will be for her. This is an extraordinary gift to her and your children. The key is for you to remind her right now that she will have to learn about finance eventually--and it's far better to learn while you still have money, instead of being forced to learn later how the money "evaporated".

I am not a financial planner, but I have tried to share my own personal experiences to give you some hints on moving forward. Again, best wishes to you and your family.

[patriciamgr2]

Estate taxes are currently very much in flux. But, when you get the trust drafted, ask your estate lawyer if it is possible to transfer ownership of the insurance policy into a separate insurance trust--thus removing the proceeds from your estate. It may only work for policies when they are first issued. but if your potential estate is bumping up against federal exemption, it may make sense to at least ask about it.

Because I am hopeful you will live for many more years, your net worth will continue to grow.

Again, best wishes. (Doug & I are heading out to dinner here in the pacific time zone, so I have to run.--i hope above makes sense). Patricia

[tibbitts]

You've done a great job of planning for the worst case; better than 99% of people.

I disagree with the posts that don't recommend paying off the house. They're coming from the perspective of decades of 5-7% mortgages and 10-15% investment returns. A few decades of 5-6% mortgages and 2% investment returns would fix that.

Paul

[SirHorace]

I think the "peace of mind" factor outweighs any investment advantage of owning a mortgage. We paid off our mortgage about 15 years ago and have never regretted it. During the several times when the job market looked bleak I was able to sleep well knowing that the economy would really have to tank for us to worry about loosing our home. It also gave great consolation to my wife who is a bit of a worry wart anyway.

SirHorace

[livestrong_fighter]

To Mike, thank you for your post. We currently live on 3500-4000/month (not including mortgage and 2 kids’ tuition). In 3.5yrs, both kids would be in school.

To DDB and others who mentioned estate planning. About estate planning, we know pretty much nothing yet, I will definitely consult an attorney as soon as I finish reading a few books about estate planning first. We do have living trust and living will. It was done online at Legalzoom, The things is that my wife never cared about our money, and I am the one who is moving around between bank, brokerage … … At this time, I’m setting up account solely under her name and started moving money into those accounts.

Good to know after 10 years you (ddb) are still doing well! Keep doing well and be the winner forever!

Englishgirl, sorry to hear your story, you must be very tough girl yet very nice, thank you for your advice. At this time, my 5 yr old knows I’m sick and had surgery, my younger one is only two and really doesn’t know anything yet. We have told my 5 yr old that daddy is really sick and have a big booboo. We haven’t told him the possibility of dying yet. I still have chance of winning this battle. If I had started feeling really bad, I will definitely take your advice, but at this time, I don’t want him feel devastated. But at this stage, I want his life as normal as possible. I will meanwhile find professional helper’s list now.

Swyck, and harryD, Keep doing well! J

Patricia, thank you for your thoughtful advice, they are very much appreciated. I will definitely get my wife involved when we see estate attorney, your advice are very helpful! I will make sure our plan is not only sharkproof, but also possible bulletproof. LOL. Thanks again!

Again, thank you for everyone’s thoughtful post!

[LesterFreamon]

[LesterFreamon]

Livestrong_Fighter,

I hope you will fight like hell and beat your cancer.

I see at least three issues with your situation, all of which should be addressed immediately.

(1) You need to see an estate planning attorney immediately. You may wish to set up trusts for your minor children for their college tuition, or to have part of your life insurance proceeds set up for them for another use. You and your wife should have your wills updated (or made for the first time). If you pass away soon and your wife unexpectedly dies soon thereafter, who is going to take care of your minor children? You need to see an estate planning attorney to get these questions answered and to have the proper legal documents should you indeed pass away shortly.

(2) You need to figure out your investment goals and objectives should you pass away. If you are fearful that your wife might not be savvy enough (or care enough) to do it on her own, then seek out a fee-only advisor like Rick Ferri of Portfolio Solutions. The last thing you want is your $1,200,000 to end up in the hands of Merrill Lynch or another full-service broker.

(3) Your children will likely need some professional help dealing with the loss of their father should you indeed succumb to the cancer. Take the advice of other posters and strongly consider therapy/counseling for your children.

[patriciamgr2]

Because the OP is new to the forum, he may not be familiar with Mr. Ferri's investment philosophy. Because his firm is committed to using low-cost, tax-efficient vehicles, I know that a number of Bogleheads have left his name for their heirs--should an advisor be required. He doesn't solicit business on this forum, but many of us have been extremely impressed with his books (all about Asset Allocation, all about index funds, & the ETF book are all on my shelf) and his many intelligent, thoughtful posts.

I'll repeat my original advice, however. Hiring an adviser is never a substitute for understanding the basics of your own financial planning. The sooner both you and your wife feel comfortable with your financial and estate planning, the sooner the two of you can focus entirely on the really important issue--your health.

Also, the original poster should know that after he and his wife complete the cash flow planning, and the determination of what asset allocation is required to fund the shortfalls in cash, he should feel free to ask the forum for suggestions on a portfolio. A wonderful contributor named Laura has a "sticky" post which sets out the way to ask the question to maximize the quality of the input you get from the forum on specific investment choices.

Good Luck and Best Wishes.

edited to correct typos

[Babakhani]

Livestong,
I admire your courage. You may feel that you are doing your duty, but that is more courage than many people who would cower into depression and blame.

a) you already know to get an estate attorney. I had my trust and will set up for $900. You don't have to go expensive.

b) I would put the money in something conservative, such as 25/75 stock bond portfolio. The dividends of that fund as well as the SS money should be decent to live on.

c) I would strongly urge that once the kids start school, your wife to get a part time job. The extra income, even though little, would make a huge difference, similar to an extra payment of mortgage per year does. It also has the added benefit of keeping her tools sharp and keeping her in the business without a long lapse. Even though she is smart, people lose unused skills and many things change.

May God be with you in this fight and next life.