Ask an Advisor: I’m 83 and my wife passed away in 2019. I’m selling the house I lived in since 1977. What is the best thing to do with my money?

Ask an Advisor: I’m 83 and my wife passed away in 2019. I’m selling the house I lived in since 1977. What is the best thing to do with my money? – John

Experiencing the loss of a loved one is never easy and in certain instances can alter the original onset of your initial financial plan as I am sure you’re already aware. 

Allow me to first start off by offering my deepest condolences.  

As the surviving spouse I am sure some new concerns and questions have come up pertaining to what the next chapter of your life will look like.  Being that you’re currently in the if not close to the “no-go-years” of your retirement there are a couple of risks that you need to make yourself aware of prior to making a decision on how to use the proceeds from the sale of your home.

Defining the Need

To better advise what you should do with the proceeds from the sale of the home, we first need to identify your current goal(s) and objective(s).  Here are some considerations:

• Is the sale of the home stemming from a financial need due to the loss of your spouse?
• Are you selling your home due to health concerns and/or needs?
• Will you be downsizing or moving into an assisted living facility?
• Is there a current or potential future need for at home or skilled nursing care?
• Do you have a desire to be closer to family?
• Is leaving a legacy to family a concern or focus of yours?

By better understanding the goal(s) and objective(s) we can provide more suited guidance on how to utilize the home proceeds.

Understanding Your Greatest Risks in Retirement

Based on where you’re at in retirement today there are a couple of risks that come to mind that you should be aware of.  Through awareness you should be able to better determine what to do next with these funds.

Longevity Risk – No one can predict how long they will live.  This complicates planning since a retiree has to secure an adequate stream of income for an unpredictable length of time.  From a retirement income standpoint if you don’t have the means to cover you monthly fixed expenses then you may want to consider low-risk solutions that can provide you with some yield or interest.  Solutions may consist of: high yield savings account, bond ladder, CD ladder, or an immediate fixed annuity that offers the highest potential income payout along with the return of premium at death if there is $1 remaining in the account. 

If you have the financial means to cover both fixed and variable expenses then you might consider taking on some adjusted-risk based on your overall risk appetite and time-horizon for said funds.  Solutions may consist of: non-qualified account holding mutual funds, ETFs, individual stocks or variable annuity that offers a return of premium at death if there is a $1 remaining in the account.  You’ll likely want to tilt more so toward dividend paying stocks for your equity allocation. 

The ultimate objective is to make sure that you don’t outlive the assets you have in your war chest today. 

Inflation Risk – As a country we’ve been combating inflation since late 2021.  Inflation acts as a silent tax and in our retirement years it reduces our purchasing power of income as goods and services increase in price, impeding the our ability to maintain a desired standard of living.  This puts addition pressure on longevity risk being that we’re having to spend more of our current assets to cover the same level of basic needs. 

Options for addressing inflation risk may consist of: investing in TIPs, Series I Treasuries, investing in stocks, reduction in spending habits, or leveraging an inflation adjusted income stream.

Long-Term Care Risk – Chronic diseases, orthopedic problems, and Alzheimer’s can restrict a person from performing the activities of daily living, which will require financial resources for custodial and medical care.  If you don’t currently have long-term care coverage today and have family history of needing either in home care or assisted living care you may want to leverage your home sale proceeds to prepare for this potential need. 

Based on your current age, traditional long-term care may or may not be an option.  The average stay in an assisted living facility for men is around 2.2 years.  According to Genworth Financial the national median cost of assisted living facilities in 2021 was $4,500 per month or $54,000 annually.  This is subject to change based on quality-of-care facility, medical assistance needed, and area of the U.S.

You may also want to review your existing estate planning documents to ensure that your powers of attorney are setup or updated to respect your wishes along with your will and living will. 

In Summary

There are too many variables that are unknown at this time for any financial professional to provide you with a definitive solution you should implement. I encourage and recommend that you speak with a financial planning professional to review your existing financial wellness status.

I encourage you to also include your children if you have any to make sure they’re on the same page and to help reduce the risk of elder abuse.  The intent would be for the financial professional to provide you with the “financial MRI” along with solutions that are in your best interest. 

Michael R. Acosta, CFP®, ChFC®, CSLP® is a financial advisor based in Charlotte, North Carolina who serves clients nationwide.

Get to know Michael by visiting his profile page on Wealthtender or visiting his website to learn more.

Please note that Wealthtender earns a nominal monthly fee from Michael in exchange for providing access to the benefits described here, subject to these terms. This compensation creates a natural conflict of interest when we favor promotion of Michael and other financial advisors in the Wealthtender community over advisors not featured on our platform. Wealthtender is not a client of these advisors or firms.

Financial Advisor and Registered Representative of Park Avenue Securities LLC (PAS). OSJ: 6115 Park South Drive, Suite 200, Charlotte, NC 28210. Securities products and advisory services offered through PAS, member FINRA, SIPC.  Financial Representative of The Guardian Life Insurance Company of America®(Guardian), New York, NY. Park Avenue Securities is a wholly owned subsidiary of Guardian. Consolidated Planning, Inc. is not an affiliate or subsidiary of PAS or Guardian. CA insurance license # 0M50974. Guardian and PAS do not offer student loans to finance education nor do they offer legal to tax advice.  2022-143040 Exp. 9/24. 

This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.

Find a Financial Advisor

Do you have questions about your financial future? Find a financial advisor who can help you enjoy life with less money stress by visiting Wealthtender’s free advisor directory.

Whether you’re looking for a specialist advisor who can meet with you online, or you prefer to find a nearby financial planner, you deserve to work with a professional who understands your unique circumstances.

Have a question to ask a financial advisor? Submit your question and it may be answered by a Wealthtender community financial advisor in an upcoming article.

–

Do you already work with a financial advisor? You could earn a $50 Amazon Gift Card in less than 5 minutes. Learn more and view terms.