Can a family of 3 live on 1.2M and never touch principal?

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firebird
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Can a family of 3 live on 1.2M and never touch principal?

Post by firebird »

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!

- Livestrong Fighter!
Last edited by firebird on Fri Dec 17, 2010 9:06 pm, edited 1 time in total.
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White Coat Investor
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Post by White Coat Investor »

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
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Culture
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Post by 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
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Post by 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.
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Re: Can a family of 3 live on 1.2M and never touch principal

Post by bearwolf »

livestrong_fighter wrote: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.

...

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

Thanks again!
Livestrong,

I'm sorry to hear about your diagnosis. You don't mention any specifics about your cancer. I would like to share some of our story with you. My wife was diagnosed a little over a year ago with invasive malignant melanoma. She had a large tumor removed but the cancer has metastasized to her lungs. With melanoma this is generally considered to be bad and has a very low survival percentage. My wife has started treatment at MD Anderson and is on an investigational medicine. Since last fall she is in complete remission. All of the tumors are completely gone. We have gone from planning a funeral in 6 months to looking forward to many more years together. So keep you chin up, with the research going on at cancer centers like MD Anderson there is always hope.

In regards to your financial question. There is a study called the Trinity Study that says if you have a 4% withdrawal rate you have a very high probability of your money lasting at least 30 years. 4% of 1.4 million is $56,000. If you have a 3% withdrawal rate ($42,000) i believe the money will last a lot longer. Would that annual amount allow your family to keep their current standard of living? In 15 years the kids will be college bound and your wife would be able to pursue full time employment at that time.

Just my thoughts.

BearWolf
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G12
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Post by 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
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Post by 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.
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theduke
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Post by 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
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Post by 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.
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bottlecap
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Post by 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
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Post by 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 !!!
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firebird
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Post by firebird »

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!

- Livestrong
Last edited by firebird on Fri Dec 17, 2010 9:07 pm, edited 1 time in total.
rainyday1
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Post by 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
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brick-house
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Post by 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:
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?
Your Social Security statement should provide a projection of survivors benefits based on your record. It is located directly below your retirement projections on page 2. Please find a link that shows a sample of page 2, plus a link to order a new statement.

http://www.ssa.gov/mystatement/sample2.htm

https://secure.ssa.gov/apps6z/isss/main.html

Please find a link to the Social Security Manual for Survivors Benefits and a link to the Survivor Planner.

http://www.ssa.gov/pubs/10084.pdf

http://www.ssa.gov/survivorplan/index.htm

One thing I find helpful when dealing with financial puzzles, is to use Excel and simply create a time-line with all potential sources of income (life insurance, social security, retirement plan, possible work income, etc) and all expenses. It sounds simplistic, but it provides a template for planning and an easy way to see changes to variables.

I would also echo the posts about considering a fee only financial planner. My suggestion would be an hourly fee only financial planner (Garrett Planning Network is one resource). The financial planner can help you build a plan and determine any outside help that you need (estate/trust attorney, investment adviser, etc.) at a fair cost.
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ddb
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Post by 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
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB
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Kenkat
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Post by Kenkat »

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
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Post by TheEternalVortex »

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

...
Last edited by jh on Tue Mar 30, 2010 2:46 pm, edited 1 time in total.
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firebird
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Post by firebird »

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!
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Post by White Coat Investor »

livestrong_fighter wrote: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!
Careful now, you're getting out of order in developing an investing plan. First, set your goals. Then, set an asset allocation for each goal. Finally, choose the investment vehicles (such as BRK-B) that help you reach that asset allocation. Step 3 is by far the easiest, but only when preceded by steps 1 and 2.
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
mhalley
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Post by 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
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Post by ddb »

livestrong_fighter wrote: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?
Ideally, any gifts to trusts would flow directly from your estate, and not through your wife. If your wife gifts, for example, $100K to each kid's trust, then she is eating up $174K of her $1 million lifetime gift exclusion ($100K per kid minus $13K annual exclusion).

I'm glad you got some answers on the SS situation - $3,500 per month will undoubtedly help a lot, plus has built-in inflation protection and is very tax-friendly (max of 85% of the benefit is taxed on the federal return). With a paid-off house, ideally your wife will be able to live on the SS benefits alone for several years.

I fought cancer about 10 years ago and won, though I was fortunate to have an occurrence which was never considered life-threatening. Best of luck with your battle!

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB
snowman9000
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Post by 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.
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Post by ddb »

snowman9000 wrote: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.
Disagree in most similar situations. If the mortgage rate is, say, 5%, I'd take a guaranteed 5% return over any investment portfolio I could develop (even if expected returns are higher, they come with risk). Plus, there are emotional benefits to being debt-free and practical benefits of having one fewer bill to pay. I might agree with you if paying off the mortgage would consume most of the liquid assets, but that is not the case here.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB
fishndoc
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Post by fishndoc »

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.
This is very good advice, and you would be wise to follow it. I would not "dump" on my wife the responsibility of going with a prenup, or setting up the trust.
SEE AN ESTATE ATTORNEY, and get this done now. It will probably only cost you $1-2k, including a will if you don't already have one.

Also, while it is a good idea for her to educate herself on investing and managing money, I would still go the fee-only planner route (you've had some good suggestions above). If she is alone, she is gonna have her hands full raising children and managing the household. I would, however, strongly recommend that she never give any planner power of attorney over her assets, even just the power to trade. Pay for the advice, then go home and move, invest or redeem assets as needed.

Good luck to you and your family. As it seems life often likes to play games with us, the more effort you put into planning your demise, the more likely you may be to survive.
" Successful investing involves doing just a few things right, and avoiding serious mistakes." - J. Bogle
sambuca08
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Post by 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
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Post by 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.
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Post by 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.
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TxAg
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Post by TxAg »

englishgirl wrote: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.
Hi Livestrong. I wish you the best. Keep fighting and hopefully you won't need all this advice. I don't have much to add except that I have a similar story Englishgirl, and I agree with her post....especially the part about professional help, both in home maintenance and counseling.
bigH
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Post by 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
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Post by 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
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Post by 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
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Post by sb2010 »

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

Just want to say best wishes LiveStrong!
HarryD
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Post by 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
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patriciamgr2
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Good Luck with your health challenges; some thoughts on $

Post by patriciamgr2 »

edited
Last edited by patriciamgr2 on Sat Feb 28, 2015 3:09 am, edited 1 time in total.
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One other thought

Post by patriciamgr2 »

edited
Last edited by patriciamgr2 on Sat Feb 28, 2015 3:10 am, edited 1 time in total.
tibbitts
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Post by 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
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Post by 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
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firebird
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Post by firebird »

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
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Post by LesterFreamon »

EmergDoc wrote: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?
No kidding. I've been a big proponent of buying more life insurance (term) than the general rules of thumb suggest. Term life insurance is a product that is inexpensive, simple to understand, and easy to compare among a wide variety of carriers. I've never known anyone who said "My husband/wife had too large of an insurance policy." I have, however, known more than a couple of folks who wish their spouse had a larger insurance policy. The other issue many folks fail to consider is the effects of inflation on their payout should they die during the term. A $1,000,000 policy right now could be sufficient for some folks, but if the term is for 20 years and the insured dies in year 19, the purchasing power of that $1,000,000 will be seriously ravaged by the effects of inflation for almost 2 decades. It seems desirable to purchase a large amount of term life insurance when one is in their mid to late 20's for a period of about 20-25 years. I'm guessing most (Bogleheads, at least) can self-insure by the time they are in their mid 50's.
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Post by 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.
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patriciamgr2
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Re: suggestion about Mr. Ferri

Post by 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
Last edited by patriciamgr2 on Mon Mar 01, 2010 12:55 am, edited 1 time in total.
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Post by 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.
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