Sudden Changes, Uncertain Future

The Situation

Willow recently lost her husband, Tom, shortly after they both retired. The loss was was unexpected and changed her life in a lot of ways, but she’s working hard to figure out her next steps. Tom had the knowledge needed to make the right financial decisions and so she didn’t get too involved with their finances. Now, however, she needs to get a handle on her financial situation and plot a strategy that will help her move forward after her loss. She came to us for help.

Willow didn’t even know what types of accounts she and Tom held, so we asked her to bring us all of the statements and account records she had. We reviewed every account and walked her through what needed to be done to retitle each account in her name. We also helped her through the process of claiming life insurance proceeds, evaluating her social security options, and ensuring that she got the benefit of the survivorship feature on Tom’s pension.

Our Approach

Once we were through the procedural aspects, we took a step back to look holistically at Willow’s financial situation, including developing an understanding of her immediate priorities and long-term goals. We organized and consolidated several of the accounts that Tom had opened over the years, also providing Willow with a clear and concise snapshot of her investment holdings. We showed her how Tom’s diligence and aggressive investment tendencies put her in a strong financial position, but also noted that it was time to reassess her investments in light of her changed circumstances and her discomfort with market risk. Willow’s understanding of the investment world was limited, so we taught her the key concepts without burdening her with more than she cared to know. Based on our conversations, we settled on a moderately conservative allocation of stocks and bonds, as she noted that she was willing to sacrifice some returns for the security of a more stable portfolio. 

With Social Security benefits and half of Tom’s pension continuing, most of Willow’s discretionary spending was taken care of, so she wouldn’t be leaning too heavily on her accounts for income. Still, we wanted to make sure that she took the Required Minimum Distribution from Tom’s IRA before the end of the year (as well as begin taking her own next year). She wasn’t familiar with the concept, but we handled everything to make the distribution and avoid the associated 50% penalty (in addition to whatever taxes were owed) if she did not take the correct amounts. 

Following Tom’s death, Willow decided she wanted to move to a retirement community where several of her friends lived. After evaluating all of the various options for entrance fees and monthly community fees, we showed her how the sale of her home could cover all of the upfront costs with enough of a remainder to invest to help pay the monthly fees. 

We also connected Willow with an estate attorney to review her will and other estate documents and make any updates that were needed. She mentioned that her oldest daughter has been helping her lately with legal and financial issues. We welcomed her to bring her daughter to future meetings if she’s comfortable with us sharing information, as we often facilitate meetings with multiple generations for our clients. We also recommended a CPA who could help with her tax filing in the year ahead, as this was something that Tom always took care of. 

Although Willow came to us with very little experience making financial decisions, we showed her steps she could take to build her financial knowledge.

Disclaimer: These case studies are being shown for illustrative purposes only. Actual performance and results will vary. These case studies do not constitute a recommendation as to the suitability of any investment for any person or persons having circumstances similar to those portrayed, and a financial advisor should be consulted.