By Douglas Goldstein, CFP®

“Everything was fine until my husband died,” a widow told me recently. “That’s when his pension stopped.” With tears in her eyes, she asked, “How will I support myself now?”

All too often, I run into families where only one spouse receives a pension. In that case, it is important to plan for the eventuality of the pension owner’s passing. What will happen to the surviving spouse? Most pensions have the option of receiving a higher payout during the lifetime of the worker, or to opt for slightly lower payments, and have the option of a partial payment (usually between 40 – 60% of the original pension) after the worker’s death. In “second-to-die” pensions, the monthly amount received will be less than pensions that only cover a single life. However, even a diminished income stream still comes in handy when paying the bills. And, depending on the length of retirement, the total amount received from the insurance company could be greater in a surviving spouse pension.

When interviewing one couple recently, I discovered that the husband had chosen single-life coverage for his pension. I asked what his wife will live on after he passes away, and he replied, “She’s very resourceful. She’ll figure something out.” When I pressed further and asked why he didn’t select a second-to-die option, he responded, “By covering only my life, we get a higher monthly income while I’m alive,” he answered. “And nothing when you’re gone,” I added.

Dealing with the loss of a spouse is difficult enough, so make it easier for your loved ones by ensuring that they will have the financial resources to take care of themselves.
If you are nearing or already in your retirement years, it is imperative that you prepare a financial plan to help you determine which pension options suit both your and your spouse’s needs most appropriately. By looking at all your assets and cash-flow possibilities, an experienced, licensed adviser can help you to get a better sense of what you can hope for going forward.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA and NFA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.

By Douglas Goldstein, CFP®

Most people’s largest asset isn’t their house or their bank account. Their most valuable asset is themselves and, more specifically, their ability to generate a reliable income. What would happen if you suddenly became disabled and couldn’t continue in your regular employment? Not only would you be out of cash in the short term, but chances are you wouldn’t be able to continue your savings program, putting your long-term fiscal future at risk, too.

That’s where disability insurance comes in. All parents realize that life insurance protects their children if they aren’t here to provide for them physically. Indeed, life insurance is often a necessity when you have minor children. But disability insurance is equally important, since a disabled breadwinner is costly. A lack of comprehensive disability insurance is frequently the biggest gap in a family’s financial planning program.

A common objection to disability insurance is that paying premiums is a waste of money, since chances are the policy will never be needed. But statistically, people between 35-64 years old are more likely to get injured than to die. Not only are disabled people frequently unable to work, but their medical bills and assorted needs can end up costing large sums. Those monthly disability payments then become a critical source of income.

Even if you have an emergency fund, it’s unlikely that it would be able to cover medical costs and your family’s basic budget for an extended period of time. Disability insurance helps protect your hard-earned savings by providing benefits proportionate to pre-disability earnings. Speak with your insurance agent about getting a disability policy. And if you already have a policy, review it to make sure that anticipated payments are in line with your salary.

Douglas Goldstein, CFP®, is the director of Profile Investment Services. He is a licensed financial professional both in the U.S. and Israel. He offers securities through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA and NFA. Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.