He was the kind of person who was subtle smart. His career had been spent fixing things, and I perceived he was the kind of guy who could fix anything. In meetings he didn’t talk much, just a well placed one liner here and there, but he mostly just sat there taking things in.
She on the other hand did pretty much all the talking. A gregarious floor nurse of nearly 40 years, she’s the kind of nurse you want to meet if you end up in the hospital. The kind of nurse who turns down promotions to management because she’s so good at being on the floor. She always came prepared to meetings, a list of questions, always taking notes.
Retirement was right around the corner, and they had big plans. Their son lived on the West Coast. They want to spend time there, they had a huge cruise they were already paying on. They had saved well and inherited some stock from her mother. Things were looking good, they knew it, and it was so close they could taste it. She resolved to work until 65 for Medicare, but she was counting the days.
He was three years older and eligible for his pension at 65. So he decided to go part time and collect when she was only 62. She liked having him around the house more, and his stress level dropped.
We modeled their retirement using planning software. Although it looked mostly good, the computer determined the potential success rate was a little lower than we like. When I got the results, I was surprised, so I ordered up some “stress tests” to try to determine why the software was throwing up this small red flag.
As it turns out, his pension did not offer a survivor benefit. So the stress being identified by the model involved the mortality risk of him dying earlier in the 30-year simulation. We went back to the drawing board, a few tweaks, and I was confident we could improve the model.
We advised him to defer collecting his Social Security until age 68. He was a bit crabby about this, as he really wanted to collect at 66 and four months. He didn’t need the money while she was working, but correctly felt he had earned the benefit and he wanted to collect. But his benefit was higher than hers and by deferring it we showed that it solved part of the retirement model problems. If he died earlier in retirement she would move to his higher benefit, and we needed it to by the highest benefit we could. He grudgingly followed the advice.
He also had an old life insurance policy he was tired of paying premiums on, and he wanted to use the cash value to buy a new Toyota Tundra. Well, I’m never the guy who passes on a new truck, but in this case I tapped the breaks a bit. We ordered a report from the insurance company. In order to keep the policy financially viable so it would last longer, we actually had to leave the cash value intact and pay a little more in premiums each month. He was crabby about this, too, but he followed the advice. I had him sell some inherited stock instead, and he still got his truck.
With these two minor adjustments the model moved back into an acceptable range of success. She is 65 in September, and set to be done by the end of the year. We’ve been meeting every six months to make sure they were on track. The last meeting was in March.
Two days before Father’s Day she arrived home to find him lying in the garage. It was a hot day; the scene showed he had been mowing the grass and had gone in to get a drink. The glass was still sitting on the workbench. The ice had not yet melted. He died of the same type of hidden heart defect that high school athletes sometimes do, there had been no warning signs, medical or otherwise.
She is, of course, devastated. But her retirement will still work. He got advice that made him crabby, he followed it anyway. I know there are a lot of things he would have liked to say to her, but the decisions he made to protect her say some of it for him.
Opinions are solely the writer's and are for general information only and are not intended to provide specific advice or recommendations for any individual. The example provided is an individual experience and may not be representative of the experience of other clients. Stock investing involves risk, including loss of principal. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at email@example.com. Securities offered through LPL Financial, member FINRA/SIPC.