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RETIREMENT BRINGS with it a host of questions. The No. 1 question: Do we have enough for a financially comfortable retirement?
It’s an issue that’s no longer relevant to me, but it’s certainly relevant to my wife Elaine and to almost all HumbleDollar readers. But that fundamental question is just the beginning.
There’s a host of other retirement questions we ought to ask ourselves—about whether we have the right investment mix, how we’ll spend our time, whether we’ll opt for traditional Medicare or Medicare Advantage, who will be our social network, whether we’ll work part-time in retirement, when we’ll claim Social Security, whether to buy long-term-care insurance, where we’ll live and more. These sorts of questions are frequently grist for HumbleDollar articles.
But what about the questions we aren’t asking? Here are seven crucial questions that I don’t think get nearly enough attention.
1. When will our life be downsized? Eventually, somebody—either us or our heirs—will have to deal with our stuff. Who will it be? As many HumbleDollar commenters have made clear, it’s best to downsize before diminishing mobility forces us to do so. It isn’t just because the packing and moving will take a physical toll. Also, sorting through the clutter in the basement can take many months—time we may not have if we procrastinate for too long.
2. Are we putting off estate planning, wrongly assuming we’ll be capable of handling it later? It’s a story I’ve heard too often in recent years: Retirees put off organizing their financial affairs, assuming they’ll know when it’s time to act. But that moment of clarity may quietly pass us by, as our mental faculties slip away, and we could end up bequeathing a huge mess to our family.
3. What will happen to our taxes when the first spouse dies? You might have seen mention of the widow’s tax. It could, of course, turn out to be the widower’s tax. But either way, the spouse left behind often ends up paying significantly more in income taxes because he or she now has to file as a single individual, rather than as married filing jointly.
4. How will the surviving spouse cope with one Social Security benefit gone? Upon the first spouse’s death, the benefits received will drop by a third and perhaps more. How come? If one member of the couple was receiving spousal benefits—a maximum 50% of the other spouse’s full retirement age benefit—that spousal benefit will disappear, leaving only the main breadwinner’s benefit.
If the disappearing benefit was larger than the spousal benefit, the hit would be even larger. Will the Social Security check that remains, plus other retirement income, be enough to cover the household’s expenses, which likely won’t fall much after the first spouse’s death?
5. What if we can’t drive? This is less dire than it once was, thanks to home delivery by grocery stores, restaurants, Amazon and countless others, along with ride-sharing apps like Uber and Lyft. Still, if you live in a rural or suburban area, being unable to drive can make going to the doctor and dentist awfully difficult, and your social life could wither away.
6. Are the kids on board with providing care—or are we just assuming they are? This, alas, seems to be a topic that many families simply don’t discuss until a crisis is upon them. That doesn’t matter if you intend to pay for visiting nurses or head to a continuing care retirement community, and you have the financial wherewithal to do so. But if you assume your adult children will help with your care, you should make sure that is indeed a good assumption.
7. What other dubious assumptions are we making? I see folks make all kinds of questionable retirement assumptions—that stocks will notch double-digit returns, that their spending will fall later in retirement, that they’re unlikely to live beyond their mid-80s, that they know exactly what will make for a happy retirement.
I wouldn’t be so confident. If you’re age 60, think back to what you were like at age 30 and what you wanted out of life. That was 30 years ago. Now, imagine it’s 30 years from now and you’re age 90. Are you really sure you know what lies ahead and what you’ll want years from now?
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.
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One other dubious assumption we could be making: Age-in-place or other independent living without planning for Assisted living/memory care or CCRC options to manage later stages. The stress on children or close relatives will be huge.
In my entire life there have two people that I agree with everything they said and wrote: Milton Friedman and Jonathan Clements. I am 64 years old.
I loved that last comment about looking back. I wonder if we’ll be able to make a realistic assessment.
Excellent questions and ones I’ve circled back to repeatedly since my spouse died suddenly five years ago, leaving me and three teenagers to fend for ourselves. Our financial house was mostly in order… but…
#3 is my biggest ongoing concern, partly because other aspects of our lives went sideways almost instantly after he died. Managing my grief, working with the public schools who (pre-pandemic) had no idea how to deal with grieving children, a freak accident, early retirement, pandemic (who plans for one of those?) And bingo, my final year of filing jointly and two years of qualifying widow with dependent children were gone. Those would have been opportune years to convert IRAs into Roth IRAs but I was too busy addressing other matters. (I once made a list of every task my spouse did, routinely, it ran two pages long, now I do them all. Also during these years, public schools here were closed for part of one and nearly all a second academic year, meaning zoom school at home and socially isolated teens.). So I will pay substantially higher taxes as a widow. Plus, trying to accurately budget draws from accounts with unrealized gains leaves me worrying about accidentally crossing into higher tax brackets and IRMAA payments (while I am still paying for college and health insurance for two of the kids. With the “kids” now “adults” (one 18 and twin 22-year-olds) I suppose I could just stop worrying about them, let them fend for themselves. But that seems counter to what my spouse and I worked toward all their lives.)
#6 I’ve told the kids I expect nothing from them in terms of care now (they are inexperienced and busy finishing school and looking for their first full-time jobs) and yet I know they don’t want to ignore my inevitable decline. I assure them we’ll repeat this conversation occasionally, and we’ll reassess.
#1 is ongoing, relatively painless. My mantra is “all trash cans full, every week.” Regular trash, recycling, and green waste (keeping yard/garden in order). Lots of donations. Once I put a whole bunch of stuff on the front lawn with a “free” sign, almost everything gone in a few hours. Emptying the house is crucial for me as a widow and a retiree. Much stuff is about the past, and thinking about the past isn’t as satisfying as a focus on today’s activities. While the house slowly empties, the kids can imagine a future where one buys out their siblings to makes it their home. They are learning how to maintain this place, and keep it clean. I’ve told them if they can’t (dry runs whenever I’m in my tin casita in Arizona), I’ll sell it and bank the money, which is also my potential fund for paid assistance if/when I fall apart and can’t care for myself and they can’t take care of me either.
#7 I think you’ve captured the essence of the what else’s. Don’t assume you’ll have good health, don’t assume you’ll avoid costly repairs (“this is the last new roof I’ll have to put on” “this is my last car”). Don’t assume your estate planning won’t need to be revisited (Secure 2.0 Act of 2022’s 10-year emptying of IRAs comes to mind…)
Here’s the biggest unasked question I try to answer every day. “What will make today a ‘good enough’ day?” That is, given my situation of the moment, how can I prosper today: marvel, laugh, share my good fortune, seek out support, fix something, try something new, or simply check on my brother. It’s another take on “What’s creating meaning and purpose in my life today?”
This made me think of the following question. My wife and I didn’t marry until we had been together 25 years and our kids were in their early 20s and we had separate bank/brokerage accounts all that time, although they were linked and we have had POAs for years. Do we combine our bank/brokerage accts or keep them separate? Since we have a few accounts we cannot combine and the main accounts are linked and we have POA, maybe it makes no difference. Or does it?
I’d think about what would make matters easier in the months immediately after one of you dies. For instance, if there’s a checking account from which bills are paid directly, it would be easier after the first spouse’s death if it was owned jointly with right of survivorship.
The payable on death (POD) beneficiary option should be used on all individual accounts that aren’t or can’t be combined, such as individual IRAs.
Downsizing can be a difficult one.
My grandmother was an artist. She left behind a lot of art. Some of it hangs on our walls, some is in the attic, and some is in care of a small gallery in New Jersey. My mom also returned to painting when she retired. There are piles of her art. And I’ve been a very prolific artist, so there’s a lot.
I could walk away from the moving truck of stuff in my mom’s house, but not the art. If we had been dancers, downsizing would be easier.
Also, there are my dad’s musical instruments whi he paid a lot for, but have no resale value. But they sound so beautiful, so they need to find new homes with mucisians who would appreciate them.
I’ve found that the original owners are usually far less sentimental about their possessions than their family, who assume the original owners must have really cared about all this stuff because they hung on to it. But it’s more likely that they never took the time — or had the time — to get rid of their possessions. That’s why it’s such a kindness if folks take the time to downsize their own life. My advice: Don’t assume anything found in the attic or the basement was that important to the original owner. It was gathering dust for a reason.
That’s a great list. Earlier this year, I initiated a letter from the deacons to our church members with a list of questions. We divided it into about a dozen questions for younger folks, and about a dozen for those near or in retirement, though there was some overlap. They included many of the topics from your list, including estate planning and planning for income for a surviving spouse.
The church elders had some reservations about getting too far into a member’s personal business, but the deacons felt strongly that we should send the letter. We are called upon to help members that have a financial crisis. Most often, it’s a situation that could have been avoided or mitigated with some foresight and planning. We are trying to head off a problem before it happens.
Edmund – It would be beneficial for me (and I think lots of others here) if you posted the questions the elders and deacons came up with for younger folks and those near or in retirement.
Dave, I’ve posted the list on the Forum. I hope you find it useful.
RE: “If the disappearing benefit was larger than the spousal benefit, the hit would be even larger”
Sorry but I do not understand this statement. The surviving spouse is entitled to receive the larger of the 2 benefits, upon the passing of the other spouse.
Can you elaborate pls.
Thx
Consider a simple example: Spouse A’s benefit is $100 while spouse B’s benefit is $75 — because spouse B isn’t getting a spousal benefit, but rather a benefit based on his or her own earnings record. When one of the two spouses dies, the household loses $75 of the combined $175 in benefits.
Ok, so you are referring to the percentage of the benefit lost compared to before the loss.
So the loss of SS household income would range between 1/3 to 1/2. (If I did the math right, looking at the extreme cases) Correct?
Yes.
Of course there is some expense reduction when one spouse dies. Maybe not entirely offsetting the loss of income, but significant (food, clothing, cell, etc.). I read an article a while back about single senior seniors becoming roommates to save expenses and for companionship. A great solution if one can find right person, especially for senors on a tight budget.
I’d like to think that our estate plans and financial affairs are in order, but when I read articles such as this one, I notice that little voice in my head asking “What could go wrong?” I need to remind myself often that low probability events still happen, as your personal experience illustrates all too well. Thanks for sharing your wisdom with us!
It’s good to be thinking this way. It’s the “Black Swan” of estate planning. Every couple of years I make an appointment with our estate attorney and sit and say, “I’m dead. Show us how the plan plays out.” That way my wife gets a preview of what is involved.
this is morbid but it actually works very well. I want to organize a grand memorial party after I die and your suggestion is the best way to plan it.
Great article. Some lesser questions I have confronted. What happens when I go on vacation and am too old to rent a car? When can I accept that I can’t hit a golf ball well any more? When will my hands shake enough that I can’t paint the line I want on a canvas any more? What is the difference between forgetting what I came into the kitchen for, and accepting that my memory just isn’t what it used to be? Can I accept that my far away kids have to live their own lives and raise their own kids and can’t easily find the time to fly cross-country to visit me with a handful of pre-teens? And, at what point will I decide that maybe a financial advisor can actually help me?
We are beneficiaries of a very unique situation. One the finest financial minds is sharing with us his thoughts during this tough time of his life. Most writers do a lot of theoretical writing/planning. For example, a 30-year-old writing about retirement planning may know the formulas but doesn’t have the practical experience that comes with retiring. Jonathan is giving us perspective that I don’t think I’ve ever read about anywhere. It reminds me of Teddy Roosevelt’s The Man in the Arena.
And, of course, the comments are priceless. So many make great additions to the theme. Questions that you wouldn’t otherwise think about.
The Gentle Art of Swedish Death Cleaning by Margareta Magnusson is an interesting book about clearing your clutter. I think she was in her 80s when she wrote it, so she had that perspective. In spite of its title, it takes a light-hearted approach and is funny at times.
That’s an extraordinary comment. Thank you for that.
Thanks Jonathan. A wise person once told me that answers are easy, but the questions are hard. I have been guilty of not asking the key questions and regretting it later a few times.
There is a lot of focus upon investments, returns, risk, etc in financial planning. IMO, people need to spend more time estimating their spending in retirement. Years ago I did a financial plan with Fidelity, and it forced me to estimate my spending in retirement. There was a lot more detail in that than I expected, and I realized if I under estimated my spending, that could negatively change my outcome.
Jonathan, there’s so much wisdom in this article. I’ll be coming back to it as it motivates me to plan for the future because it’s coming whether we plan for it or not. Your continued wisdom and insight is appreciated more than you’ll ever know.
Jonathan,
As usual impeccable insight/perspective!
I lead an informal lunchtime discussion / training group at work. Usually, my colleagues and I talk about detailed job topics with an eye toward transferring info to junior folks. I’ll be leaving my employment in a few weeks, though, so I spent the last session chatting about finances – pensions, 401k investments, health insurance, etc.
It was fascinating to hear (a) how little my intelligent colleagues knew about their own financial situation and (b) how grateful they were to talk openly about these topics. The items on Jonathan’s list – and what’s discussed in most HD articles and forum topics – can be difficult for people to talk about. But they should. I’m grateful to the HD community for nudging me to help my friends at work.
Oh, and I sent them all a link to Humbledollar.com. . .
I think about these questions frequently and as time goes by more often. I think I have the purely financial issues under control, but the others are more difficult and easy to keep putting off.
I have prepared a detailed set of final instructions. I gave a copy to my two children who are executors for them to review and be sure all issues are covered. I can’t get a reply. Now I have given it to another son and hope for feedback.
I don’t think our children want to face how old we are.🥲
This is an excellent idea. If you want a response from the kids, make the first line of your letter, “Do you want to be in the will/trust?” That might elicit a response.
Jonathan, as usual so honest ad with so much good will. I’ve already tucked it into my “things I have to do” file.
Jonathan – Regarding # 3, “The Widows Tax,” I’ve told my wife and our M.D. that if I’m dying on Dec. 31 I want to be put onto a cheap resuscitator so I stay alive until Jan.1. Then they can yank the cord, let me die, and my widow can file a joint return for that year, and have that full year to figure out the best tax strategies for her remaining years. – Dave
I, along with many family members, was present when my father-in-law died a few years ago. My father-in-law was in hospice care and passed at home. He had dementia and the extended family was providing around the clock care with the help of a as needed hospice care nurse in the final weeks of his life. I would sometimes be called upon to help when my father-in-law wandered after turning the wrong way from the bathroom as we live nearby and I still had the physical ability to lift him, when he fell, back into the hospital bed that had been set up for him at his home.
As part of that experience I learned that, in my state, the hospice nurse actually pronounces the legal date and time of death. The hospice nurse must be present to fulfill this duty and there is often a delay from the time the family reaches out and the time the nurse arrives and legally determines that death has occurred. In our case my father-in-law actually died shortly before midnight but the hospice nurse arrived after midnight so the legal DOD was actually the day after he died. It was not December 31 when he died, but I have certainly thought about the what if financial impact had it been so.
I also learned that in hospice, at least in our state, that our family was permitted to have the funeral home pick up the body from the home after the hospice care nurse pronounces death. Thus, my mother-in-law avoided the additional monetary and needless cost of the body having to first go to a hospital and all of the associated emotional stress on her.
I cannot say enough good things about the care, compassion and professionalism that our hospice nurse gave our family that night.
Jonathan, even before your diagnosis I had already looked ahead to the inevitable, whenever that time might be, and I wanted to ensure that all was in order for whoever might be handling my estate. Just this past week Larry (my husband) and I had our wills updated along with new POAs and health directives. Our estate attorney is young and so with any luck will be around to help guide Larry with how to proceed should I be the first to go. I have decluttered my life and I would like to think it will be smooth sailing for Larry. We are fortunate to have a mother who is similarly in tune to ensuring all her documents are in order. This is not the case with my father-in-law who is leaving us with a financial mess and stubbornly refuses to accept personal responsibility for his actions. One thing we can do as we get older is to realize the strain that you can put on your children and caregivers when you leave them with a financial and estate disaster that needs to be managed as we enter into old age, dementia and beyond. With all that said I want to express my admiration for you with how you have managed your diagnosis. Many of us can only hope that we have the same noble and brave approach.
Your brother is a total badass Nick. Your final sentence sums up my feelings exactly.
Yes he is.
Thanks, Nick!
As a mother of two sons, I know how your mother feels to know her sons love and respect each other as you both clearly do, like my James and Andy. We share the good times and the sad.
Having read Humble Dollar daily for the past several years and approaching my 49th birthday, you continue to offer good advice with plenty to consider. I will forever be grateful to you, Jonathan and the fellow Humble Dollar contributors.
Lots of good questions, Jonathan. I’m not weighing in much today because I’ve already shared a lot about my progress along these lines in the four years since Doug died. Getting my new will completed recently was a relief, as well as giving the letter of instruction and handwritten passwords to my adult children. Now I just have to review and update occasionally when anything changes. Thanks for your reminders.
Great stuff, Jonathan. It’s so true that we often think we have plenty of time to accomplish the important stuff, and instead focus on the less important. I’m as guilty as anyone. I’ve been meaning to update our estate documents since we changed states a few years ago. I have the name of a well-regarded estate attorney – all I need to do is make the call. I just put a reminder on my calendar for Monday morning. Thanks for the gentle reminder.
#6 is also very interesting. There have been a number of articles and posts about living arrangements and care in our later years, and when to start that planning process. Again, we may think we have plenty of time to address this, but we may not.
Rick – your previous articles indicate you are in southern NJ as am I. I do need to updated my will and associated estate documents since sadly joining the widowed ranks a few years ago; would you be willing to share the contact info of the well regarded estate attorney?
Autul Gawande’s book Being Mortal expands on this area. It’s a very constructive individual read and family discussion tool.
Hello, yes, ‘last man standing indeed.’ Or likely woman. My husband, 60, active, an inveterate walker, uber-healthy, left a full-time position to return to self-employment and his passion – developing marvelous historical panels along city trails in Kansas and Missouri. I was with him at the HR office when he signed the pension papers. We ran the numbers (well a bit) and he/(well we) did not chose the joint and survivor benefit. We had other assets, he was the epitome of health. Less than 2 years later, he was diagnosed with highly aggressive small cell lung cancer and died in 10 months. I am grateful that his term life insurance, inching toward 20 years, was still in force- the funds covered two college educations, renovations, health care (ouch, Cobra and self-employed group insurance prior to Medicare). I know, I know: I run numbers, I should have insisted on the joint and survivor annuity. It wasn’t a huge pension, but it would have provided another guaranteed source of income, covering in part the lack of a second Social Security payment. Yet he was so excited and looking forward to his next adventures and we were full of life at the moment those papers were signed.
Other assets will cover retirement for me; but I know so many couples where this choice could be a source of immense regret.
Eileen, thank you for sharing your intensely personal perspective. Deepest condolences.
thanks Mike- I do share with others I know to avoid similar choices.
Eileen, thank you for sharing your experience with us. Best wishes for you going forward.
thank you. I have long been an avid reader of HD.
When we were deciding on a pension vs slump sum for my retirement benefit first we compared the amount we would receive if we bought an annuity on or own from an insurer and the amount wasn’t close. Then we decided it was easiest to let my employer (a hospital) do the footwork with their insurer who we figured had been fully vetted since they were covering physicians as well as other employees.
Then we considered whether we should choose a single or 100% joint survivor policy. The difference was about $150 per month if I remember correctly. We figured that if this difference was a game breaker then we were not in a good enough financial situation for me to even retire.
Finally as I have written before my wife’s family has had a person from each of the two most recent generations live to at least 102 1/2 (the record is 103 1/2).
So in the end after looking at all the facts the decision was a no brainer, pension with 100% survivor.
We used a similar logic to decide on pension with 100% survivor benefit.
My father died at 46, but his “younger” sister is now 97, and my wife’s father lived to 97. We chose the 100% survivor benefit for my pension. My wife’s older sister is now a widow, and her husband had a 0% survivor benefit. I don’t know if he had other options, but he died at 85, and she could have used some additional income.
So many get no pension in today’s retirement scenarios, what a luxury to have that decision to contemplate.
I agree! Just thought it would be helpful to read someone’s thought process in making the decision if it is required of them.
yes, a thoughtful analysis David.
So sorry for your loss, Eileen. That must have been a very difficult time, with two children still at home or in college. I’m wondering if any of his panels are in St. Louis or vicinity? I visit there regularly and always spend time exploring. Would love to see his work and share with my family members there. Thanks.
Sorry for delay Linda. I’ve been in rural Nebraska all day, visiting the hidden gem Homestead National Historical Park. What history is here for all those who sought their 160 acres amid the toughest of odds. A great visit!
Henry’s panels are in Kansas City and in Overland Park, Kansas on the Indian Creek Trail – not far from the HQ of Creative Planning where Jonanthan had been an advisor. !
Thanks, Eileen. I will add these to my list of planned destinations. .
Eileen, I’m very sorry of your loss. Thanks for sharing your story.
Thanks Rick. P.S. I always enjoy your articles!
I’m so sorry to read about your husband.
thank you Jonathan.
Thank you for sharing the unique perspective that you currently are experiencing, Jonathan. I imagine that it can’t be easy but it could turn out to be very valuable for (us) your readers.
How about how long to maintain life insurance in retirement to protect against the loss of social security income? I’m talking about simple term life.
Many years ago I took a variation of term life insurance from IEEE insurance products on myself and wife; it is guaranteed to remain in force till age 95, but with declining payouts from age 68 to 95, I’m currently 72. My wife passed several years ago; however, I continue the policy with my three adult children (ages 30 thru 37) as beneficiaries to be used for settling my affairs, house sale and funeral expenses. They will split any remaining funds.
That’s a great point. Our term policies end at ages 65 and 69. We’re 64 now. We carefully timed them such that they’d cover our earning years and end when we’d locked down our retirement income (even taking us almost to the maximum Social Security benefit at age 70). I hadn’t considered continuing or re-upping them, but the point about both SS and the “widow’s tax” makes me wonder if we should run some more numbers.
My term life ends after 10 years when my son will be ten and i will be 53. Could we have gone longer? Of course but we have enough and only “more” would have been the reason and not a true need.
Very good question.
I constantly harp on Bogleheads who spend all kinds of time and energy building the “perfect” retirement strategy and withdrawal plan, but don’t once run the numbers for the “last man standing.” It frustrates me, especially since the last man standing is likely to be the person less familiar with financial details and uncertain of what to do next.
You are absolutely right to be streamlining your portfolio, and running numbers for the last man standing.
Man plans and God laughs
The “last man standing” means thinking about all the potential things which could go wrong?