Five things you ought to know – NOW

“Shoulda, woulda, coulda” are the laments of so many who don’t have a vision or conversation about their financial future. At some point we die and leave behind a spouse or heirs. Evermore, a surviving spouse can expect to live anywhere from a few years to decades after being widowed. So, what are five things you need to do now so “shoulda” is out of the equation?

Any one of these five subjects, by the way, are not gender specific. It all depends on how you divvy up the duties in your household. No matter who does what, get a tabbed binder or well labeled accordion folder and commit your closely held knowledge to paper as well as a flash drive. Also, if you are single, your adult children or heirs ought to be shown where you keep the file or notebook with pertinent contact information such as your lawyer, banker, broker, accountant and insurance agent. So what are the five things you ought to know now?

• Accounts and passwords: It could take an act of Congress for you to access the accounts and passwords of your deceased spouse. Always know how to access your bank accounts, insurance, investments, turnpike pass, Facebook, credit cards, email, frequent flyer accounts, cell phone, FAFSA and (drum roll, please) Netflix! Another slug of information is all the automated withdrawals and credit card charges that can be difficult to easily identify from monthly statements (e.g. utilities, insurance, mortgage payments, etc.). Keep all these accounts and passwords current and handy.
• Insurance policies: Understanding your financial condition is essential when you lose your mate. Planning now for how best to collect benefits from life insurance policies, retirement accounts or social security is essential and can make a meaningful difference in your monthly income or estate distribution. Your insurance agent(s) can provide you with all the details regarding your coverage so you can put them in a folder that you or our children can easily access should anything happen. You may want to consider having a family meeting with your financial or insurance professional while everyone is still healthy, to explain your plans and answer any questions.
• Retirement accounts: In the old days, a pension payment would continue to cover the spouse until their death. Also known as defined benefit plans, pensions are far and few between these days. Instead, most employers offer a defined contribution plan (e.g. 401(k), 403(b), etc.). Ideally, you want the security of predictable income as well as growth of assets to stay ahead of inflation. Without planning, what you’ll likely have is just a big pile of money that represents your life savings that you don’t know what to do with. Making that money last a lifetime requires some conscious decisions. As Kerry Peabody from Clark Insurance recently said, “Many financial services professionals are great at retirement planning but may not spend as much time on income planning.”

Converting certificates of deposit (CDs) or a portion of 401(k) investments into tax-preferred annuities can create a personal pension with a dependable stream of income. Also, making an election now to phase withdrawals from accounts or life insurance can allow you or your heirs to keep more of the money instead of paying it out in taxes.

Exercising your options for Social Security benefits is another good topic to discuss now. The first decision is whether to start collecting benefits as soon as you are eligible or wait until you are older. Social Security will pay a larger monthly benefit the longer you postpone your benefits.

The other consideration is whose Social Security benefits to collect. Survivors are due 50 percent of the deceased’s monthly payment. If one of you is eligible for $500 per month and the other is collecting $1,500 per month, then in this case, taking 50 percent ($750) of the larger benefit puts you ahead of the game.

• That guy: You know, that guy! The one who always (fill in the blank) every fall. It seems sometimes that spouses live in entirely different worlds or that it takes two good half brains to recall a full thought. Committing key contacts to paper should include contractors, service people, health care providers, etc.
• Dates: Uncle Bob’s birthday, contract expirations, BIG anniversaries of family members and deadlines for filing forms and taxes are all grist for your planning document. Take a look at past calendars and compile your action list .

Going it alone is tough enough without fretting about all the “shoulda” regrets. Start a conversation in your family, always have your wills in order and enjoy all the years you have together with the comfort you’ve made informed decisions because you planned ahead!