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“Hi, I’m Chris”. That’s how it all began in early 2002. My friend Dave and I were hanging out of a hole in the wall of my duplex, installing a new window. Chris was the good looking neighbor girl. She thought Dave and I were a couple, he was actually my best bud, living with me and providing his carpenter skills in lieu of rent during some hard times.
By the end of the year I and Chris were a couple, and sometime in 2003 we commenced cohabitation. Thinking back, it must have taken quite a leap of faith for Chris to bring me on board. I was 3 years divorced and between careers. My gross earnings in 03 was only equal to about 75% of my spousal support order. I was living off my savings. Chris had been single for nearly 20 years and was doing just fine without a man. The reason she fell in love eludes me.
Regardless of my scant income I always covered my half of bills, but the available savings dwindled, and I was just spinning my wheels trying to build my financial services career. I had to fall back on my commercial driver license in order to get the ends to meet. I landed a part time job driving an 18 wheeler full of mail from Toledo to Jersey City to the east, and west to Iowa.
That job enabled me to develop the other project I’d been working on, Dan’s Tax Prep. I continued driving for about 8 years until the tax practice reached critical mass, allowing me to transition from driving a semi to being semi-retired.
During those early years we kept our finances totally separate. In 2004 we sold our homes and bought a small condo together. Then in 2012 we came across distressed condo in the hands of a bank, with a small lake in the back yard, the 5th hole of the Brandywine Country Club beyond that.
Together for about 10 years, we knew that our spending and saving habits were uncannily similar and decided it was finally time to open a joint checking account. Soon after that we consolidated and combined our separate credit cards as well. Financial infidelity will never become an issue.
Now I’m the money manager, not because Chris isn’t capable, she has a degree in accounting and did just fine before I came along. I think it’s just because it’s always been my thing. So it is not a case of willful ignorance or disengagement on Chris’s part. We periodically review finances and Chris knows what we have and where to find it all.
I know from my tax business that it’s common for one spouse to take care of things. If that spouse dies first, or if there’s a divorce, someone is often hopelessly lost.
Partners like Chris will be okay after we kick the bucket, but how would we get a willfully ignorant or disengaged person into the loop?
Reading through comments, many have simplied finances through retirement—that seems to be what Jonathan has done in a hurry post-diagnosis, closing/merging accounts and retitling. Also educating beneficiaries, though he has not had many details on this aspect.
Dan, regarding your last sentence—I have thought long and hard about why the responsibility for financial and other situations, rest disproportionately with one person.
Sometimes it boils down to falling into a pattern where one partner consistently takes the lead and there is never a discussion about the roles each one is taking on and how responsibilities are divided.
It becomes more difficult to have the discussion as time passes and the emotional work of trying to establish a more equitable relationship can be overwhelming. But sooner or later the subject has to be tackled and it’s easier to discuss matters early and often in the partnership.
That a great point Marjorie. That lead person bears some responsibility to bring their partner into on board.
OK, a couple of important things. Have a Trust or Will. This will assign a line of executors, so that can be worked out ahead of time. I have a Mac and it helps me with passwords, but I also have a huge spreadsheet with every User and Password, for myself and my wife. Right, I do not believe in password programs, because it seems all major systems have failures, once in a while. If someone dies, do NOT discard their phone, you will need it for some authorizations and other info.
As for the bill pays, I have a complete listing, to guide someone when we die, either a spouse or daughter, or the like. I have automated every bill we get, and have Quicken to keep track of all bank accounts and charge cards. The more difficult one is your Finance companies like Vanguard and Fidelity and the like. What I did is made a spreadsheet of Summary of ALL Assets, with names and addresses and phones. This is NO easy chore, but your family will appreciate all the work you have done for them. My take is most people do not have a clue, and that is why they should get a fee paid as needed asset manager to help them in these situations.
Preparing for Dying is not easy, you should work with a funeral home ahead of time as well. I hope some of these ideas help folks.
Lots of good stuff in your post. I’ve been having the same concerns about password vaults. I’ve been using Bitwarden, but have created a password protected spreadsheet with the same information. I just need to pull the trigger on shutting down the manager.
Great point about the phone. Someone did an article here on HD about the all the important info that’s on one’s phone, and as a result, I added my and my husband’s phone log-in information to our master document of important info.
We also learned about making arrangements with a local funeral home last year when my mother-in-law died suddenly and we realized that she and her husband had paid-for cemetery plots 450 miles from where they lived and no arrangements as to how to get her to that cemetery. It added stress to an already difficult time.
Preparing those cheat sheets of “Where our assets are and to whom do we regularly owe money” is essential as is regularly updating and reviewing it together. Keeping the passwords separately and securely is also essential. Regarding the account holder’s name, some can be left as they are, but I felt more secure changing them to my own name. The most difficult was the cable company- I can only surmise that it was a security issue in domestic violence cases. The “clue” to the password was so obscure that the agent finally took pity on me after she had acquired all kinds of information and believed that I was who I said I was. I never knew Doug briefly had a pet snake called “Lorenzo,” which his brother confirmed was true. 😆
Linda …
As an old, retired IT guy I think you are 100% correct with your statement:
“Keeping the passwords separately and securely is also essential.”
I don’t trust on-line password “keepers”.
Personally, I keep all my userids/passwords in a small notebook My wife does the same, but in her own notebook.
There are different styles of PW managers. Essentially, a PW manager is a database with a separate page for each entity for which you need to create/retain a PW. You could create such a file using Excel, but then you would have to design the page with all the fields that you might need.
Among the differences between PW managers is what happens to the data after you enter it into the PW manager data sheet. Some managers keep the data in a cloud. Some encrypt it before storing in the cloud. Some let you use your own cloud account.
What a user needs from a PW manager is:
1) to have only one data file,
2) to have that file available on all computers and phones regardless of manufacturer that the user might own,
3) to have the file synced so that a change to the file from any device automatically changes the file on all the other devices,
4) to have data encrypted within his/her devices so that only encrypted data exists whether on their devices or in the cloud as this prevents any unencrypted data ever leaving your devices and then even if a cloud is hacked your data is still safe,
5) to have a manager that can create lengthy, complex passwords,
6) to have the PW manager retain all the security questions, PINs, or any other data that is necessary for you to do business with any entity,
7) to allow you to use your own cloud account if you desire so that PW manager firm does not even have your data,
8) support both PWs and the newer passkeys,
9), that lets you copy/paste the PWs as you need to,
10) that uses military grade encryption.
When you use a notebook, ie pen and paper, you cannot satisfy any of these requirements. You cannot create random character PWs. If you have a fire or are burgled, your notebook might be a gonner……
Given that virtually any entity today uses computers and wants you to do business with them electronically, I don’t understand how anyone can get by without a PW manager. Between medical providers, merchants, service providers, social media, banks and other financial firms, I have way over 100 entities that require me to have a PW. I have had this discussion with many of my friends who are not technically strong.
There are PW managers that will do all these things…..
Allowing a spouse to remain “willfully ignorant” or uninformed about family finances is truly unacceptable. There’s no telling which partner might suffer dementia or die first. And if we want to avoid disrupting our children’s lives to provide us physical care, why should our children be put in charge of finances for a mentally competent surviving spouse?
I am a little appalled by your first sentence. As a person in the 57th year of marriage, I can tell you that there is no practical way to force a spouse to do something they really do not want to do. This is not to say that your logic about the ultimate possible result of this ignorance is incorrect. So, when faced with intransigence, the knowledgeable spouse must make a workaround plan that provides alternative solutions to the questions of dealing with finances in event of his/her absence.
S99, my first wife fell into that category, making a workaround necessary. After our divorce, she wisely allowed our children to steer her finances, including final planning.
I too am I my 57th year of marriage. It’s not about “making” a spouse do something they don’t want to do; it’s about encouraging necessary behaviors. I’ve seen several workarounds fall apart when adult children struggling with their own problems have limited time to deal with mom’s finances.
I saw an extreme and very sad example of this on a Facebook travel group. A woman wrote that she and her husband had been on a cruise, her husband died suddenly on ship, and the ship basically just dumped her and the body at the port and went on its way. Her husband’s body was in a local morgue and she was in a hotel (this was somewhere in Europe), and she had no idea what to do next. People were horrified that the cruise line wouldn’t help her more but also asked about travel insurance, to which she replied “My husband took care of all that.”
Dan, this is an important issue. Sharon and I currently divide the financial duties, with her doing the daily chores and me the long-term stuff. We make an effort to keep each other “in the loop”, however. We look at investments together. I guide any changes but we make the decisions together. She keeps lists of what she does for us. Some of them involve her mother’s business, which I’m aware of but would need some thinking time and instructions to take over.
I suspect ignorance and disengagement is a wide-spread vulnerability among couples.
Dan – that sounds like a match that was meant to be! Congrats.
I recently listened to the Jonathan interview on Ritholtz.com. He mentions getting his estate and accounts in order – including setting monthly bills like electricity and cable in Elaine’s name instead of his. Until hearing him mention that, I’d never thought of it, but many of our bills and accounts are in my name instead of my wife’s name (or jointly).
Some of our monthly bills are in my name, others are in hers. All accounts are joint, or the other spouse is listed as survivor. As for bills, there are credit reasons to have some in each spouse’s name, and we both have individual credit cards, too.
Yes, ours is mixed up depending on which of us opened the accounts. I wonder if the utility companies would use both names on the accounts.
Interesting post. It seems to be common in committed relationships that one individual becomes the financial manager. Most of us prefer to operate from our strengths. Managing money may not be one of them. G really wasn’t comfortable with certain aspects of our finances. When we met, she was frugal and meticulous about spending. She had limited savings, was debt-free, had a small pension and SS earnings but no other retirement accounts. She also had a mistrust of the stock market. An account a parent opened for her and gifted with some internet stocks had done poorly. We were both employed.
“Partners like Chris will be okay after we kick the bucket, but how would we get a willfully ignorant or disengaged person into the loop?”
I operated from G’s strengths to get her engaged in our finances. It was a slow process and I avoided step-change. G was willing to be aware of our finances, but preferred otherwise. However, she wanted to know that we were okay. I sensed she wanted some control so we maintained some funds in separate checking and savings for her. The majority of our incomes were co-mingled.
In our conversations she was also concerned about eventual retirement. I used her perspectives as an opening. I was running spread sheets, but moved to applications such as Microsoft Money. In 1995 I settled on Quicken. This provided a means to run a variety of reports and manage investment accounts. Yes, to run them I had to be meticulous in our accounting so that the data was there. She can and does occasionally run reports, but I accepted that chore. I input most of the data, run periodic reports; income, spending summaries, savings, investments and net worth and we walk through them together. I made it clear what her financial contribution was to our well-being and she is rightly proud of this.
G and I have credit cards, which we pay off each month. G tabulates her own card spending each month which are inputted into Quicken. Eventually her checking account was closed and we operate entirely from a joint account.
She was suspect of investments, preferring money in a mattress. As her income increased, I convinced her to open two retirement accounts using her excess income. One was a Roth-IRA. The other had a professional manager. So, she had a “pro” to suggest investments in that account; providing another perspective and some independence, too. I dealt with her financial apprehension by having her set aside a significant part of her earnings beginning in 2004. We discussed what to do with this, and the benefits and risks. I convinced her to purchase Target Date funds in the Roth. Over time we moved some funds from her low-yielding savings to I-bonds. She branched into individual stocks, too.
For day-to-day finances she had a checking account. That was replaced by several credit cards. All of our funds are co-mingled and Quicken sums all banks, CDs, Treasuries, etc. G pays some of the bills via joint checking and I do others. We share this chore. This has increased her awareness of spending month-to-month.
We discussed and purchased Long Term Care insurance.
Today we are both retired. I continue to run periodic reports, we make changes from time to time (purchase CDs, buy a stock, etc.) and mutually agree on how much of our retirement to keep in our “cash stash” where it is not subject to market downturns. I acknowledge her concerns and our plan includes them.
After 25+ years, G is fully engaged, but remains reluctant. However, she is enthusiastic about the results and that is her incentive to participate, and she does. Mission accomplished!
A couple of questions Norm:
Does G have a traditional IRA/401K as well as the Roth IRA?
If so is G old enough to be required to take RMDs?
If so do you rely on those withdrawals to pay expenses?
What is the stock/bond allocation of the Roth account?
If you do not expect to have to tap her Roth account for expenses, why is it not invested in a 100% stock index fund ETF such as a total US or world fund?
We don’t anticipate ever having to touch, or not touching my wife’s Roth account for decades so that account is 100% in stocks. Our traditional accounts have our allocation to short term bonds to meet our overall allocation of 50/50. Our traditional accounts are being tapped now and will be possibly spent down without ever having to exceed what is currently the 12% tax bracket. If we come close to exceeding in the distant future will tap a small amount of the Roth to stay in the 12% bracket.
Barring having to pay for long term care for either of us the Roth is for our children, and hopefully they will not touch until required 10 years after the last of us dies.
I’ll answer David’s questions. Keep in mind that any answers consider one’s circumstances, goals, risk capacity and risk tolerance:
1. Does G have a traditional IRA/401K as well as the Roth IRA? YES.
2. If so is G old enough to be required to take RMDs? NOT QUITE.
3. If so do you rely on those withdrawals to pay expenses? NO.
4. What is the stock/bond allocation of the Roth account? Overall her accounts are 60/40.
5. “If you do not expect to have to tap her Roth account for expenses, why is it not invested in a 100% stock index fund ETF such as a total US or world fund? “
No single approach works for everyone and our approach is specific to our needs and includes G’s risk tolerance and our risk capacity. While G is not drawing on her accounts there is no need to do so to meet our “life event goals and expenses”. As far as I am concerned, she can draw as soon as she wishes, although there will be tax consequences. It may be prudent for her to draw first from the Roth.
Circumstances are important. We are both retired and no longer add funds to our retirement accounts. I’m taking RMDs and SS. G has accrued social security benefits but is taking a pension. We have no plans to bequeath to the children who are well established, preferring a list of charities. As for G’s portfolio, we review this annually, which is a “core” portfolio comprised of ETFs as well as individual stocks and bonds. We are both well aware of the drag of bonds/cash on a portfolio. Her risk tolerance is lower than mine and the “tests” she has taken indicate she is a “cautious” investor. Her #1 concern has been the ravages of inflation. She is acutely aware of the carnage of the Dot-Com bust and Banking fiasco of 2007-9. One thing we regularly discuss is “What would be the impact of a 30% stock market decline and/or or a 25% SS benefit reduction?” We routinely compare our individual and joint portfolios to several benchmarks and run Monte-Carlo simulations. I am willing to take on more risk and that has been reflected in my portfolio. However, it slowly moved to a more moderate one as I approached retirement and began withdrawals. G prefers to be uninvolved, but isn’t. Her portfolios are on “auto-pilot”. As for risk capacity, I decided to work longer and we decided to save more. Individual circumstances are part of the equation. For example, our CAGR since 2001 is double digits even after 6 years of RMDs, our home is less than 10% of our net worth and we both have Long Term Care insurance.
Norman, sounds like a good idea to take your time introducing G to your processes. It would be easy to overwhelm someone not well versed in finances. This is another good example of slow and steady wins the race.