About two months ago I sat down for a catch-up meeting with a client, Judy. She had just lost her husband three weeks ago. She looked emotionally spent. We sat down at her kitchen table for tea. She fidgeted with her hair and gazed out the window. Finally, she summoned the strength to ask "Where will the money come from?"
John, her husband of 37 years, handled the money. He handled the bills, wrote the checks, spoke to me about investing, and went to the bank every week. He knew from where the money was coming. Sadly, Judy did not. She left money matters to John and me. She never was interested. She assumed as long as she had something in her checking account, everything was okay.
Now things were different. John wasn't there. They had no kids to help. Judy was looking to me for guidance. When a client becomes a widow, everything changes. The time horizon shortens. Every decision gets magnified. Anxiety sets in. Often these worries lead to indecision and create bigger worries. I knew what she needed. She needed someone to listen to her.
"Judy that's a good question. But is that your only question?" I asked.
"Well, I don't know, I'm not sure where the money will come from day-to-day. And I don't know if I have enough to even live on the rest of my life." She went on, "John did it all. Now I just don't know. What do I with the house? Should I sell? What do I do with the life insurance check? I have all these questions and it's so overwhelming. What about his company's 401(k)? Do I have to take money from that?"
I continued to listen. Then when she paused, I looked to reassure her. I told her when a major life event happens, like losing a spouse, it is completely normal to worry. "These are all good questions, how about we take them one at a time?" She agreed.
For the next two hours, and two more cups of tea, we sat and talked about all her financial obligations and money worries. We went through the Widow's Financial Checklist, making sure no stone was left unturned. I listened and reassured her again, "We will work through this together." I heard the tone in her voice begin to lift. She was feeling more upbeat, more confident. After listening to her concerns, I had about two pages of notes. I took a deep breadth and looked up from my pen and paper, "Judy, I think I have a better idea of what's on your mind now. Here's what I propose."
"We have a lot of moving parts. John has various employer plans. You have questions on his 401(k), his health insurance, and his work life insurance. Then there is the question about the house and the mortgage. Finally, you need to know if you have enough money to live on for the rest of your life. You also need a plan for where the money will come from day-to-day. In short, you want to know whether you can continue to live life as if John was still here?" She nodded in agreement.
"Judy what we need is a plan." She wholeheartedly agreed.
Two weeks later
I came back to Judy about two weeks later. We sat at the same kitchen table and she poured me a cup of the same tea. She seemed more optimistic. I smiled and said I have the answers. She laughed. I opened her Survivor's Financial Plan and we went carefully through each section. We reviewed the monthly budget. We found some places to save money. I explained to her the 10 Social Security rules she needs to know. We went through her life insurance claiming options. We discussed whether to payoff the mortgage or keep some money in cash. Finally, I showed her the retirement projections. I explained how she can maintain her livelihood by using a three-bucket investment plan: an account for day-to-day needs, one for expenses in the next 1-5 years, and a long-term bucket invested for future healthcare needs and future living expenses. When I saw her sit back and smile, I knew she was feeling better.
Financial planning is important at every stage of life. Whether it's having a baby, retiring, or losing a loved one. Major life events can cause major anxiety. That is why planning can help. Getting a handle on your finances is about feeling in control. When there is uncertainty and life choices seem daunting, financial planning is one way to help make sense of it all. Judy is not unlike many widows. She went from being unsure of herself and her future, to feeling more confident and more optimistic about what lies ahead. If you have a little bit of Judy in you, I encourage you to take the first step. Let's have a cup of tea, and pour me a cup of your thoughts.
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Michael Aloi, Financial Planner