Are you ready to take control of your finances during life’s most pivotal moments? In this episode, we dive into the complex world of financial decision-making during key life events. Whether you’re experiencing the excitement of marriage or the joy of welcoming a new child or facing the challenges of divorce or the loss of a loved one, we’ll provide practical tips and guidance to help you make informed decisions and maintain financial stability.
Note: This transcript was produced using AI, so please excuse any typos and inaccuracies…
Marc Killian 0:00
Welcome to another edition of the podcast that’s Plan Wise, Retire Free with Jude Wilson here with me to talk about key financial decisions during major life events. And we’ve got a number of them, we want to go through and try to highlight some things to think about, should we be faced with some of these scenarios. And obviously, many of these are going to affect most of us. And hopefully, some of these won’t affect us. But it is a fact of life that things are going to happen, major things are going to happen to us along the way. And there’s some financial things to be on the lookout for as we move through them. So that’s gonna be the topic this week. We’ll get into it with Jude, how are you my friend?
Jude Wilson 0:34
Man, I’m doing excellent to eat on the day that we’re taping this. It’s a it’s a Friday, so I’m looking forward to it.
Marc Killian 0:41
Right? It’s right. You and I were joking. We’re like, what are we doing doing a podcast on a Friday? We don’t usually do that. But it’s always good to talk to you. And I hope you’re well and and your lovely wife as well. And let’s keep rolling. Yeah, man. Absolutely. Let’s get into the podcast and talk a little bit about this. Of course, as always, folks, if you’ve got questions, need some help reach out to Jude and his team at centrist financial strategies. Before you take any action on anything you hear from really any financial show, always want to see how it relates to your specific unique situation, find them online at centrist fs.com and send trust fs.com. And June major life events gonna happen to us all, let’s start with a happy one here. Marriage, right. So at some point, we are going to get married and combine our worlds. And that poses some challenges for people.
Jude Wilson 1:28
Absolutely. And I really been looking forward to this episode, because a lot of the financial planning that we do, is being proactive and thinking about these major life events before they happen, right walking client through them as they happen because they became a client before this life event, actually, or during this live event actually happening. Right? Right. So I am, I’m thrilled to talk about this. And marriage is a big one. I’ve seen a lot of different ways for people to handle their finances, there’s a great book out there called Love Languages. And if you haven’t heard of it, it’s basically how to speak to your spouse in the language that they understand the most. I really wish there was a book out for financial love languages. So you can learn about what what drives and motivates your spouse financially, right. But here’s some things that I think, definitely need to be talked about ahead of time, prior to the marriage, or soon thereafter, budgeting, budgeting causes a lot of stress for people. Whether you’re a young couple, or an older couple, combining your finances and figuring out how you’re going to actually make that work. There’s a lot of different strategies. So the one that I have seen and heard of the most is an acronym called Moy like toy, but moinet. Okay, and it’s, it’s mine, ours, and yours. So, three separate accounts, right, I’ve got my own account, my checking account, my savings account, our joint account, and then your account, okay. And our account is usually the account where all the bills get paid, we decide X amount of our salary goes into the our account, X amount of my salary goes into my account. That way I can, if I wanted to buy my golf clubs, and I, I don’t need to necessarily discuss it or get your permission. Or if I want to prize you with a with a special gift. I don’t need to worry. It’s you’re looking at the bank account. So that’s the most typical one, but that’s a good one. I
Marc Killian 3:45
like that. Yeah. But I’ll
Jude Wilson 3:47
tell you the strangest one I’ve ever seen. Okay. And if this client is listening, I’m not mentioning your name. But this is this is the one that that shocked me the most I was meeting with a new client. She had recently gotten married. And I asked her about how do they handle the finances in their household? And she said, Well, my spouse is a finance guy. He’s, he loves numbers. So what he proposed and what we actually do is he pays all the bills. And then at the end of the month, he sends me an invoice for my part.
Speaker 3 4:24
Yeah, I’ve heard that before, too. It’s very strange. He sends you an invoice. Yes.
Jude Wilson 4:32
That’s just to say that there’s many different ways to handle it. But that’s one
Marc Killian 4:36
but you got to have a strategy to your point for sure. Because it’s the number one thing that couples fight about right as money. So, you know, trying to get that off the table and we’ll move we’ll move into the second one here, Jude on my list, which is remarriage. Okay, so maybe, especially for a lot of our listening audience who are maybe, you know, 50 plus and gray divorces, unfortunately, have become more popular. We’re gonna talk about that in a second. So, inevitably a remarriage. it’d be on the horizon. Right? And so my wife and I, so it’s her second marriage, my first. And you know, so blended family concerns, even finances like we went into it to your point a second ago, which is marriage in general, we went into it saying, Okay, we’re fully functioning adults that had lives prior to getting together. And so we had our own ways of doing things. So that’s certainly something to take into consideration.
Jude Wilson 5:23
Well, I gotta tell you, this is a really important one, they’re all important to me. But this is really important, because we see your situation all the time, a remarriage, or marrying someone who hadn’t been married prior, right? Like you your first marriage, but now you have a blended family. And the biggest mistake I see, often when someone is a new client, we get all of their statements, and we’re looking at them. And we see accounts that are titled, joint tenants with right of survivorship, it’s usually the default. At most financial institutions, they don’t even ask you, they say, Hey, you want to open up a joint account. They title it that way. But here’s the problem with that, particularly if you come from a blended family, your wife passes away. Now, all of the bills prior to her passing away all accounts were joint tenants with right of survivorship. If you’re not a great guy, she’s basically disinherited her kids, because of the joint rights with right of survivorship, you get 100% of the money once your spouse passes away, if she had some concerns that she wanted to leave x to her kids, which I’m sure is normal, right? Course. Yeah. She just basically has to depend on the fact that you’re a good guy. And hopefully we’ll do that. So absolutely. Talk to an attorney. We can’t give legal advice. But that’s one to definitely look out for if you’re entering into a second or third marriage. And you’re doing and you’re a blended family. Yeah,
Marc Killian 6:57
set up all the proper stuff in some simple stuff to is just updating beneficiaries and insurance policy information. Because, you know, most people don’t realize, dude, we’ve talked about this numerous times in other podcasts that that trumps a will. So you could put in your will that you want XYZ to happen. But if you still have, especially for remarriage, I mean, every just about every advisor I know, has a story where somebody got remarried and left the ex spouse on some sort of something that’s still there. My brother I got a great story for Okay, go for it. Yeah.
Jude Wilson 7:28
Well, so, to that point, in fact, this affects both remarriage and our next topic divorce show we go right into with it. Yeah. Yeah. So beneficiaries, as you said, is one of the most important things that we do are different. We, we look at the beneficiaries and go over this annually with our clients. One horror story that I that an advisor that I know, actually this happened to or had a client that just happened to, I was a bus driver for 40 years in New York, had a great pension, well over a million dollars, was married to his wife for 25 years, got divorced, actually married a mutual friend of the wife and the new one, the new wife was a mutual friend of both of theirs, right. So the divorce was not acrimonious. It wasn’t painful. Everybody got along, okay. They actually went on vacations together. Their kids knew each other from both sides. The husband passes away, and in his will he had that his current wife receives the pension. Sure. And his ex wife received I think it was like something like $200,000. But he never changed the beneficiary on the pension. Right. So what actually happened is the current wife received everything, the pension, all of the money. And when the ex wife said, you know, it was, let’s call him Bob, Bob’s intention to
Marc Killian 9:01
leave me the 200 Grand to give me
Jude Wilson 9:03
the 200 Grand Yeah. Will you do that? And current wife, as you can imagine, said, no, no. So beneficiary’s absolutely must be updated and checked every year.
Marc Killian 9:17
Yep. Yeah. And that works. Well going into the divorce conversation, like you’re talking about, because that was Third on our list. And there’s certainly things that you want to look at, besides just that two, when figuring out going through a major life event like a divorce. And obviously, dividing assets is the big one here, dude, because sometimes people get very worked up, and it’s an emotional thing. And they’re like, Well, you take the house and I’ll take the 401 or something like that, and that may not be the best move.
Jude Wilson 9:42
Right? Right. Right. And so the, with the divorce, one of the things to look at, and we kind of touched on this or sort of maybe touched on this initially, is a prenup. I don’t see a lot of prenups in clients that come to me but it’s something that you should think about Absolutely. If you’re coming to the marriage with a substantial amount of money,
Marc Killian 10:05
probably a little what I’ve learned remarried is I would imagine what folks have.
Jude Wilson 10:08
Yes, yes. But what I have seen and I’ve talked about with several attorneys in our clients, is a prenup agreement. Post marriage. And the way that this works is that say, you and your wife have been married, and you pass away? Your wife is thinking about getting remarried to this 25 year old model stud? Yeah, who? who absolutely loves her just for her. It’s not after the money. We know that right? Yeah, yeah. But if there is a prenuptial agreement in the trust documents, that means your wife would have to have this new husband signed a prenup, prior to them getting married. The benefit of that is it takes the pressure off of her to say, hey, I want a prenup. She can say, Look, my my previous husband had us put this into agreement. And so the only way that I can enjoy all of the assets is if new husband if you sign this prenup. And what happens? Is it basically yeah, it basically takes the pressure off of her because it was something that was done prior to them meeting and to it protects the kids. Because if there is this person who has ill intent, well, they’re not gonna get 50% of what you left over to your wife.
Marc Killian 11:32
Yeah. Yeah, it’s a kind of an interesting way to do that maybe takes out a little bit of the I can’t believe you’re asking me to sign one of those things. Yeah. Feeling.
Jude Wilson 11:39
Absolutely. Absolutely. And again, this is not legal advice. This is just observations that we’ve seen. Yeah. Talk to an attorney about well,
Marc Killian 11:47
when you’re talking about marriage or marriage or divorce, certainly you want to have a team on your in your corner anyway, especially for remarriage and divorce. Maybe not so much the first marriage but because a lot of times we get married early 20s. We don’t have anything anyway. But remarriage and divorce certainly want to have that, you know, the legal attorney helping you out but also the finance professional as well. So kind of a, you know, a complete team, if you will. Alright, job changes another major life event. This, there’s some key things to think about here, should you change the jobs, especially after COVID, right, or during COVID, we saw a lot of people losing jobs, changing jobs, retiring early switching careers, you know, whatever the case might be whether you were asked to switch B aka let go, or B chose to write what are some things to think about?
Jude Wilson 12:33
This is this the biggest one that I see. And I’m trying to touch on the biggest one in each one of the categories. So the biggest one that I see is that disability and life insurance are usually very inexpensive, through your company, because your company has negotiated a rate for the employees for all the employees. And so sometimes it’s cheaper buying life insurance or disability through your company. But most of the time, those policies are not what they call portable, you leave the company, you can’t take it with you. So we tried to advise clients, definitely look at having your own policies, in addition to what you have at work. And maybe you just need your own policies just to supplement what you have at work. Because if you leave that job, now you’re completely naked if you don’t own anything outside of the company. So that’s one that we see often. Okay,
Marc Killian 13:25
good. And imagine the big ones are probably had a handle like a severance or a buyout or some sort of some sort of, you know, if you’ve severance package or, or layoff type of thing, whatever this is, you know, going through all the way through that lump sums with a lump sum, or do I take the pension thing,
Jude Wilson 13:42
so definitely we do those calculations all the time to make sure that it’s most advantageous, you’re choosing the option that’s most advantageous to you not leaving it up to the default or for the company. Yeah.
Marc Killian 13:52
All right. Let’s do two more here jus to wrap up. And of course, there’s lots of major life events, but we’re trying to hit on some big E’s here. And so let’s go to retirement. Okay, so we’ve gone through some major life events, you know, retirement is coming, and it is a major life event, like, you know, like it or not, or how are you this that you think about it? It’s a big deal, right? I mean, sometimes we look at it and say, Okay, what’s the end of the road or whatever. But, you know, we really should look at it as the beginning of a new road, which we’ve talked about many times. So you got to have some steps in place, because you’re kind of surprised many people are caught off guard about how many little things go into retirement.
Jude Wilson 14:26
Yeah, two things in here that I that we commonly see. I asked a new client all the time, what do you think will be your biggest expense in retirement? And the number one answer I hear is healthcare, and their close healthcare is depending on who you read number one or number two, but most time number two, the biggest expense that that retirees will have in retirement is taxes. Yeah. So a lot of advisers talk about investment, diversification. Don’t put all your eggs in one basket by different investments, sure, but very rarely do advisors talk about tax diversification. So having some money that will be taxable when you retire, because you put it in putting it in your 401 k or IRA. But now when you pull it out, it’s fully taxable. Having some money, that is what we call investor money, money that’s taxed at favorable rates, capital gains and dividends, usually much less expensive than income tax, that’s another, let’s say, funnel, if you will, and then having tax advantaged money, some money that is not taxable at all, like a Roth, or an HSA, or sometimes some forms of life insurance, you could pull cash value out without any tax consequence. So having a plan that incorporates how to manage your money on a tax favorable basis, most clients miss that even if they’re good financially, and they kind of understand, well, how much I’m going to need in retirement, and I’ve saved X amount. And if I, most clients don’t think about taxes. Yeah,
Marc Killian 16:03
great point for sure. You know, we started the conversation with marriage. And, you know, you mentioned the budget word, right. And here we are at retirement, and people hate the budget word. But another place that I think people have really got to pay attention is truly understanding what they spend, because often they’ll sit down Jude with someone like yourself, and you’ll say how much you spend on they’ll go, oh, we spend four grand a month and then when you start going into the numbers, it’s like, yeah, you spent double that, right. Yeah, somebody will say, Well, we make 200,000, a year between the two of us, and but we only spend, you know, 5000 a month and you’re like, Well, wait a minute, that math doesn’t add up. It’s a lot more saved. Right? So I think also, you know, getting a good, accurate read on what you truly spend as you walk into retirement is important so that you can set the right. Again, nobody likes to budget word, but just like, you know what your ins and outs are going to be so.
Jude Wilson 16:52
So just really quick on that. Yeah, we have a tool that we use or strategy that we use to help people with that. So and you’re absolutely right, that happens all the time. People, most people don’t have a real true knowledge of how much they spent now. So we ask clients when they become a client, give us your tax returns, we look at what’s the net number that they bringing into the household? Yeah. And then we look at all of their savings. And
Marc Killian 17:19
it’s pretty obvious. Yeah, it’s
Jude Wilson 17:21
pretty obvious. If you’re, you’re you’re netting $100,000 coming into the household, but you’re telling me you’re only spending 60. where’s the
Marc Killian 17:30
where’s the other 40? Right? Yeah, so you either saved it, or you spent it and it’s not in any savings accounts. It’s not anywhere near retirement accounts. Well, guess what? You spent it right. So that’s
Jude Wilson 17:38
a big eye opener for them. Because they they’re like, oh, oh, think about that. Yeah, very,
Marc Killian 17:43
very true. Great point. And I’m glad you guys, that’s something that everybody really the exercise people should go through, especially as they get closer to retirement. Alright, let’s finally finish off with our final major life event. And obviously, dude, it’s just, you know, it is what it is, we know what he you know, none of us are staying around forever. At some point, we’re going to lose a loved one, we’re going to have the death of our spouse. And there’s a lot of things that come at us, you know, in this one. And so what’s some financial aspects to pay attention to here, I got a quick story I’ll share with you that can apply to you up for some stuff, the house that my wife and I live in, they we live here and we’ve been here about seven years. We bought it from the lady she was in her early 70s, her husband passed away unexpectedly. And it took her three years Jude to clean up all of their affairs, literally clean up the house as well, but also clean up all of the affairs, because they had no plans in place for anything, right. They just kind of winged everything. He was one of those kind of you know, I do it myself kind of guys in every aspect. And one of the things she shared with me, we spent actually quite a bit of time with her. She was really sweet and gracious and walked us through a lot of the, the benefits of the property and some different things. And one of the things she shared with me that really stuck with me, because my wife and I will be living here till we pass is that she never got the chance to grieve her husband because she went right into I’ve got to fix everything after he passed mode. And we had no plan. Right?
Jude Wilson 19:08
It’s It’s heartbreaking. We unfortunately, get referred to clients that are going through that and we have one of our team members who is excellent at helping people through that time period. But a little bit being a little bit proactive helps
Marc Killian 19:25
goes a long way. Yeah, she wished she would have she wished they would have done just a few things because she could have spent some time actually, you know, just you know grieving for him right and mourning for him versus she was right into insurance documents this and payments that and you know, so on and so forth trying to figure out what they had.
Jude Wilson 19:41
Here’s two quick strategies that people should consider prior to spouse passing away. Okay. Number one, if there is a power of attorney, that power of attorney actually is terminated at death. So having a full list A plan makes a lot of sense, not just having a power of attorney, okay to making sure you understand that the death certificate is really the document that allows all the financial transactions to be executed after the death of any individual without a death certificate. And in some states, I’ve heard horror stories of it taking up to two months to get a death certificate. So we we tell clients, you should have some money set aside, that you can access that doesn’t need you to have a death certificate to get to that account, right.
Marc Killian 20:39
And it can be some simple stuff to do, like even just titling the car, right? You know, switching things over like some people just get blown away about how many little things that you if the person that passed away was the only person listed on the car, for example, you know?
Jude Wilson 20:52
Exactly, exactly. And then one last strategy in this is more so for the the second generation that may be inheriting mom and dad’s money, while the last parent is alive is still living, if they have a sizable amount, in a 401 K IRA, some type of retirement account, usually at that point, that living parent is at a low tax bracket, they’re living off of Social Security and maybe a pension. And the adult children are usually at the top of their career, meaning earning a lot more money, well, they’re going to inherit an IRA that’s going to be fully taxable, and in the future may be at high tax rates. So sometimes when we talk to our clients about is, let’s get mom or dad, whoever’s the living parent to start doing some Roth conversions now, pay taxes at their current tax rate, which is far less expensive than yours. And then when mom or dad passes away, you will inherit this money on a completely tax free basis. Yeah, so it’s just one strategy to kind of think of ahead of time, nobody likes to have these conversations. But being proactive will make the circling back to your story. Give people the time to grieve without having to dig deep and become a financial Sherlock Holmes pretty
Marc Killian 22:14
much all of this stuff. Yeah, get organized, I would say is definitely a key point get organized, and get professional help dude, right. I mean, look, at the end of the day, you know, the big takeaway for this for many people is, it’s not always their bag, finance, and all this kind of stuff. And usually, Murphy’s Law is the person that’s passes away first, and the relationship is probably the one that did do a lot of the financial stuff. So have a team have a professional that you can turn to so you know, like for my wife, I mean, she knows that I do this for a living, right. So she’s like, she’s knowledgeable, and she’s up to speed. But she’s like, Hey, when you pass, I’m gonna reach out to this person, right? She knows to contact, you know, our professional, so that she can do the things that she needs to do. And then she’s got that resource, right. And I think that that’s a great peace of mind for people to consider to give to their loved one as well. So because we all know we’re going to pass at some point, get the things in place so they can do the things they need to do, they can grieve for us. They can, you know, take the time to to heal the way they need to and not have to stress over all the financial decisions because there’s a lot of them at the at the loss of a loved one. So those are some major life events. Those are some things to think about. If you need help get with a qualified professional like Jude Wilson, who is a holistic wealth manager at centrist financial strategies. Don’t forget to subscribe to the podcast on Apple, Google Spotify or whatever platform you like using playing wise retire free to type it in the search box and you can find it that way. Or just stop by the website plenty of good tools, tips and resources. It’s interest fs.com That’s interest fs.com Dude, thanks for hanging out my friend. Always good to talk with you.
Jude Wilson 23:49
Always good to talk to you. My friend enjoyed it. Enjoy your weekend.
Marc Killian 23:52
Absolutely. You as well. And we’ll be back with more episodes here in June on Plan wise retire free with Jude Wilson.