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Started By
Message
Need direction on drawing out retirement and etc...
Posted on 10/21/14 at 3:45 pm
Posted on 10/21/14 at 3:45 pm
Long story short, I have a family member that has been diagnosed with terminal cancer; he asked me to guide his wife (57ish) with the financial end. We are still praying for the best, but still want to prepare for the worse. A little background on their current financial situation: no mortgage, vehicle loans or any other significant debt.
I don’t think getting her started is anything I can’t get going, but at the age of 30, I don’t know what I don’t know about the process. Any informative advice or websites will be much appreciated. I few of my initial questions are:
1. Do you set up a scheduled withdrawal?
2. What would you do with life insurance money?
I don’t think getting her started is anything I can’t get going, but at the age of 30, I don’t know what I don’t know about the process. Any informative advice or websites will be much appreciated. I few of my initial questions are:
1. Do you set up a scheduled withdrawal?
2. What would you do with life insurance money?
4
Posted on 10/21/14 at 3:49 pm to TigerFanatic1
Does she work? If so what is her income? When was she planning to retire? Prayers to your family member, my dad's cancer just came back so I know how bad it sucks.
Posted on 10/21/14 at 3:59 pm to AngryBeavers
I know exactly what you are saying, 2 months ago, they thought he was cancer free. One month later, he is really down. Thanks for the prayers, I will return them for you and your family.
My aunt doesn't work or draw any income. Honestly, I don't know when he planned to retire, because he was at a point in his career that he had a somewhat high paying, low stress position. It makes it difficult not knowing actual account balances; they haven't volunteered it, so I haven't asked.
My aunt doesn't work or draw any income. Honestly, I don't know when he planned to retire, because he was at a point in his career that he had a somewhat high paying, low stress position. It makes it difficult not knowing actual account balances; they haven't volunteered it, so I haven't asked.
Posted on 10/21/14 at 4:09 pm to TigerFanatic1
A lot would depend on the wife's age and whether she is working. She is entitled to Social Security surviving spouse benefits at age 60 but Medicare does not kick in until 65. Health insurance would be a major consideration, particularly if she is covered by a group policy through her husband's employment that would end with his death. Make certain that it remains in force.
Your first order of business should be to determine her baseline income from Social Security and any other pensions and how long before she's eligible to start drawing them. Go with her to the Social Security office, take a number, and talk to one of the reps. They're actually pretty helpful.
I assume when you talk about withdrawals that it would be from a retirement account. If so, be careful not to incur early-withdrawal penalties. If the account is in the husband's name and she is the sole beneficiary there are very specific rules for withdrawing money before she reaches 59-1/2.
A possible use for the insurance money is living expenses until she reaches the age where she can begin drawing from retirement accounts and other pensions without penalty.
The retirement account should be examined to be sure that the investment allocation is appropriate for someone her age. As a rule of thumb, she can safely withdraw 4-6% of the principal each year without fear of outlasting her money.
Hope this helps.
Your first order of business should be to determine her baseline income from Social Security and any other pensions and how long before she's eligible to start drawing them. Go with her to the Social Security office, take a number, and talk to one of the reps. They're actually pretty helpful.
I assume when you talk about withdrawals that it would be from a retirement account. If so, be careful not to incur early-withdrawal penalties. If the account is in the husband's name and she is the sole beneficiary there are very specific rules for withdrawing money before she reaches 59-1/2.
A possible use for the insurance money is living expenses until she reaches the age where she can begin drawing from retirement accounts and other pensions without penalty.
The retirement account should be examined to be sure that the investment allocation is appropriate for someone her age. As a rule of thumb, she can safely withdraw 4-6% of the principal each year without fear of outlasting her money.
Hope this helps.
This post was edited on 10/21/14 at 4:22 pm
Posted on 10/21/14 at 4:16 pm to TigerFanatic1
Without them disclosing what they have saved and what types of funds they are it's hard to say. Like the poster above said insurance will be a big concern and she can use some of the insurance to bridge the gap to where she can start withdrawing on retirement accounts without penalties.
This post was edited on 10/21/14 at 4:17 pm
Posted on 10/21/14 at 7:26 pm to TigerFanatic1
Thanks guys, I really appreciate the information, keep it coming if you come up with anything else. Really makes since with the life insurance money.
Posted on 10/21/14 at 7:42 pm to TigerFanatic1
Hey sport, sorry for the bad break. I'd recommend you finding an estate professional (tax and/or legal) to help, a single mistake here can more than pay for their services.
Best of luck considering the situation.
Best of luck considering the situation.
Posted on 10/21/14 at 7:52 pm to soccerfüt
quote:
I'd recommend you finding an estate professional (tax and/or legal) to help,
Just be sure you don't find one that also sells life insurance. You don't need an annuity.
Posted on 10/21/14 at 8:00 pm to Layabout
^Good advice, find a tax guy or an estate lawyer who is not trying to sell any "products" merely guiding your decision-making process.
Godspeed.
Godspeed.
Posted on 10/22/14 at 9:48 am to soccerfüt
quote:
^Good advice, find a tax guy or an estate lawyer who is not trying to sell any "products" merely guiding your decision-making process. Godspeed.
This.
As a person that was forced into retirement due to health reasons, this is what I know that might help. I'm 56 years old.
he should apply for SSD asap if he has been out of work 6 months. If he gets that, he can get Medicare. If he gets that, make sure to apply for supplement insurance right away. That cost me $350 a month, but I have 0 amount out of pocket expense going in and out the hospital every week.
Check to see if he has disabling insurance. If he does, make a claim ASAP. That will go into effect most of the time after being out of work 12 weeks (short term) and after 6 months, goes into long term.
If he is also on SSD, he can make withdraws from any 401K's without having to pay any fines. He can set up a monthly withdraw to be deposited into a checking acc that his SO can use.
In my case, with my supplement insurance, if I draw any moneys that my employer paid into a retirement acc , they would reduce there payments. Not so if I draw from a IRA acc that monies I paid in. One needs to read and ask questions there with there agents.
Life insurance. This blows the big one for me. I carried about 1/2 million when I was working. Once I retired and after two years away from my job, My life insurance was canceled.
I had to buy a life insurance that cost me $37 a month for 20K. Penn Life. Health insurance for spouse. Big dollar ticket.
For my wife, that cost close to $600 a month with shitty coverage due to Obamacare. Before that, better coverage cost $300 a month. 
Best of luck and prays sent. If you have any more questions, just ask.
Posted on 10/22/14 at 10:00 am to TigerFanatic1
I've dealt with several situations of a spouse dying young and I've learned that the surviving spouse usually goes a little nuts (not the right word but you get my drift) afterwards. They start buying things that they don't need and would never have bought before they lost their spouse. And I'm referring to big purchases, new luxury car, extensive house remodeling...that sort of thing. They go through their insurance and saved money very quickly.
I mentioned those experiences to a psychiatrist friend of mine once and he explained to me it is a normal reaction for someone who has lost a loved one somewhat unexpectedly. He had a psychological term for it that I can't remember but it basically is where the brain is desperately trying to compensate for their loss by replacing the loved one with physical things.
I don't know if you have enough influence over your aunt to guide her away from that behavior, and I hope your uncle beats cancer and you won't even have to face it, but it's just my experiences with similar situations that might save your aunt some destitute days later.
I mentioned those experiences to a psychiatrist friend of mine once and he explained to me it is a normal reaction for someone who has lost a loved one somewhat unexpectedly. He had a psychological term for it that I can't remember but it basically is where the brain is desperately trying to compensate for their loss by replacing the loved one with physical things.
I don't know if you have enough influence over your aunt to guide her away from that behavior, and I hope your uncle beats cancer and you won't even have to face it, but it's just my experiences with similar situations that might save your aunt some destitute days later.
Posted on 10/22/14 at 8:52 pm to LSURussian
Again guys thanks for the replies. A lot of great info being given.
LSURussian, I'm worried about the exact thing you stated about big purchases. They recently sold their home and decided to build a slightly smaller home on a smaller property, it is currently under construction, so I hope she will be satisfied with it since it will be new and modern. More than anything, I am praying for him to beat it also.
LSURussian, I'm worried about the exact thing you stated about big purchases. They recently sold their home and decided to build a slightly smaller home on a smaller property, it is currently under construction, so I hope she will be satisfied with it since it will be new and modern. More than anything, I am praying for him to beat it also.
Posted on 10/23/14 at 6:34 am to TigerFanatic1
quote:
They recently sold their home and decided to build a slightly smaller home on a smaller property, it is currently under construction, so I hope she will be satisfied with it since it will be new and modern. More than anything, I am praying for him to beat it also.
I'm doing the same thing. Down sizing, but will keep the bigger house to rent out. Just some extra income, the way I look at it.
Posted on 10/23/14 at 2:10 pm to LSURussian
quote:
I've dealt with several situations of a spouse dying young and I've learned that the surviving spouse usually goes a little nuts (not the right word but you get my drift) afterwards. They start buying things that they don't need and would never have bought before they lost their spouse. And I'm referring to big purchases, new luxury car, extensive house remodeling...that sort of thing. They go through their insurance and saved money very quickly.
My younger brother keeled over from a heart attack when he was 57 leaving a widow eight years away from Medicare. She did exactly what you describe--remodeled the house and took expensive trips. She gambled on the health insurance saying it was too expensive and she would wait for Medicare. Fortunately she won that gamble. Her daughter likes to say that her mother now takes a once-in-a-lifetime trip every year.
Posted on 10/23/14 at 2:19 pm to TigerFanatic1
quote:
It makes it difficult not knowing actual account balances; they haven't volunteered it, so I haven't asked.
This is key and would have an impact on best way to handle drawing out. If she's 57, there needs to be a plan for her for the next 25-30 years.
Posted on 10/23/14 at 2:36 pm to Layabout
quote:It's such common behavior I'm surprised there isn't more publicity about it to prepare friends and relatives to watch for it and perhaps try to counsel the widow.
. She did exactly what you describe--remodeled the house and took expensive trips.
Posted on 10/23/14 at 2:37 pm to LSU0358
Does she have any marketable skills? I'd encourage her to at least think about part time work at some point soon. Unless there is a huge pile of retirement income and/or life insurance, the best course of action is to delay drawing on those funds as long as possible. A part time job will make her feel more financially independent and a bit more in control of her own fate. It can also stave off the impulse spending--if she has an outlet/work she enjoys, she's less likely to seek solace through retail therapy.
Hope he pulls through....and I hope they can navigate the financial shoals together. I'm a big promoter of financial literacy and planning skills for women: so many survive their spouses, and many widows are plagued by fear & uncertainty with relation to financial matters. It's no good to shield a wife from money thoughts---she will almost certainly have to make decisions on her own at some point.
All you young marrieds, don't go down the path of one spouse (male or female) taking sole responsibility for money matters; make sure you discuss these things equally.
Hope he pulls through....and I hope they can navigate the financial shoals together. I'm a big promoter of financial literacy and planning skills for women: so many survive their spouses, and many widows are plagued by fear & uncertainty with relation to financial matters. It's no good to shield a wife from money thoughts---she will almost certainly have to make decisions on her own at some point.
All you young marrieds, don't go down the path of one spouse (male or female) taking sole responsibility for money matters; make sure you discuss these things equally.
Posted on 10/23/14 at 4:16 pm to hungryone
quote:
All you young marrieds, don't go down the path of one spouse (male or female) taking sole responsibility for money matters; make sure you discuss these things equally.
Happy Marriage 101.
Next Saturday will make 35 years married to the same woman.
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