A Man Is Not a Financial Plan

Neither is a woman a good financial plan. We must never depend on someone else for our retirement. Remember, you must at least sit in the co-pilot chair for your retirement planning because, let’ face it,  couples don’t always pass at the same time. That means that one of you may be piloting the plan at some point by yourself. Over the past decade, I have seen countless situations where spouses had to take over the plan right before it appeared to be an emergency landing. Do not let this be your story.

Here is your co-pilot checklist

Know your flight plan (income plan for retirement) – Every time a certain client calls, I cringe a little. I pray it’s not bad news. WHY? Because she was not included in the decision making for their retirement income. Her husband’s military pension has no Survivor Benefit Plan (SBP), which means she gets 0% if he passes. He decided to begin taking Social Security at age 62, which yields the smallest check possible for her if he passes away. If something happens to him, she will go from nearly a six-figure lifestyle to about $20,000 a year, overnight. You must know what incomes the two of you have now, what will go away if one of you passes, and how you will meet your needs for retirement in that situation. If you are short pension income, will your investment portfolio generate enough income without being 100% dependent on the stock market?

Be prepared if you lose an engine (divorce) – One of my clients met her husband while he was in residency  to become a Doctor. She was there to help him get through residency by paying the rent. She helped him start his practice, set up their bank accounts, buy the home and put the mortgage in his name. When they met with their financial advisor, she was treated as if she wasn’t even in the room. Sadly, when he met someone else, she was locked out of the bank accounts and had to ask for temporary support to live and access to her own bank accounts. No one wants to plan for divorce because we don’t want to think of it as a possibility. However, I live in the real world where people need to protect themselves. Therefore, make sure you are a joint owner on the bank accounts, maintain an individual credit history and make sure you keep your professional licenses current. Lastly, if you do find yourself in a divorce, we feel its imperative that you know what you two have – because you cannot make a fair/equitable request of your share of the assets if you don’t know what the assets are.

Check the cabin pressure (risk tolerance) – Make sure you and your spouse are open and honest with each other and your advisor about your comfort level with risk in your portfolio. If you are conservative, the last thing you want is to have your portfolio exposed to too much risk and then we go through a market correction and your portfolio drops 20% to 30%.

Check the Exits – (beneficiaries are up to date) – It is up to your to make sure all of your bank and investment accounts have a named beneficiary. When you visit the bank, ask to see who are your primary, contingent and tertiary beneficiaries. You need to have a plan A, B and C by confirming you have POD/TOD (Payable on Death or Transfer on Death) on all of your accounts.

I am blessed to have many clients who are pilots because they have shared many pearls of wisdom. One once told me “Remember, you fly an airplane with your head, not your hands and feet.” The same can be said about financial planning: You don’t fly with your emotions or luck, you fly with your head.

The views expressed above reflect the views of the author as of the date referenced. These views may change as market or other conditions change. This information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives. Investment advisory services offered only by duly registered individuals through Swan Capital. Investing involves risk, including the potential loss of principal. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. 651241 – 6/20