After Husband’s Illness, Wife Needs New Financial Plan

Rosemary Spielmann had hoped to be retired by now. But her husband’s illness and the key she threw in their finances altered that plan.

Ms. Spielmann, 65, earns $53,400 a year working as an administrative assistant in Arden Hills, Minnesota, a suburb of St. Paul. She loves her job, although she wants more flexibility.

Her 74-year-old husband was diagnosed with dementia in 2019 and he now lives in a memory care facility. Most of his care costs are covered by his pension of $3,981 per month (which includes a 100% survivor benefit), his monthly Social Security benefit of $1,848, and the Minnesota Medical Assistance Program. .

Once her husband’s retirement benefits fully paid for her childcare costs, the family home was no longer affordable, Ms. Spielmann says. She sold the house last summer for $580,000, paying off the mortgage and other debts and buying a used car. She now lives in a $260,000 townhouse with a $100,000 30-year mortgage at 2.6%. His new monthly payments for mortgage, insurance, property taxes and homeowners association fees total $971.

Other monthly expenses include: $366 for her husband’s health and dental insurance, $105 for her nursing home; $200 for telephone, gas, electricity and internet and $410 for food. She had cut Audible and Netflix subscriptions to further cut expenses, Ms. Spielmann says, but found she missed them too much. So she recently added them for a total of $30. Ms. Spielmann also spends $75 a month on her dog’s care.

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She will be the beneficiary of her husband’s $30,000 whole life insurance policy, which is fully reimbursed. But she ditched her own life insurance plan because of the expensive premiums.

“As I shrink, the person I am is adjusting to the life I was given, instead of trying to keep the life I no longer fit into,” Ms. Spielmann says. .

She has no credit card debt. She has an emergency fund of $39,900 in a money market account and retirement savings totaling about $90,000, including a 401(k) with $24,000 and IRAs worth $46,400. She also has a health savings account with $15,000.

She expects to receive about $1,200 in monthly Social Security benefits when she reaches full retirement age this summer, and about $1,052 from her own pension. She has prepaid funeral plans for her husband and herself, and her own estate planning documents are in order.

Thanks to her savings efforts, Mrs. Spielmann has about $2,700 a month for home renovations and is able to provide occasional help for her four adult children. She also makes an extra mortgage payment every quarter – a strategy she hopes will allow her to retire once the house is paid for, no matter what happens with her husband. She would like to one day be able to travel and maybe go back to school to study counselling.

Advice from a pro

Benjamin C. Olson, wealth management advisor at Guardian Wealth Strategies in Minneapolis, says, “Good decisions made years ago give him choices today.

Among these decisions: the survivor’s benefit at 100% on her husband’s pension. If he predeceases his wife, she will receive her and his full social security benefits, in addition to her own pension. Combined, that would add up to $6,880 per month, which should allow him to retire comfortably, given his current family budget.

But in the short term, Mr. Olson agrees, Ms. Spielmann’s finances are tight.

She’s done a good job of cutting her expenses, he says, but she should consider applying for her own Social Security benefit immediately. Although her full retirement age of 66 and 4 months isn’t until July, she’s running out of “free money” by then. It doesn’t matter if she loses a few dollars a month filing early, he says, because when her husband dies, she’ll be entitled to her full $1,848, well beyond her own $1,200 benefit.

Plus, Mr. Olson says, she may consider moving to part-time work soon. Yes, she would lose her employer’s health coverage, but she is eligible for Medicare. Working a few hours less could preserve his earning power while giving him much more flexibility with his precious personal time.

“I like her hard work, her focus and her commitment, and I just don’t want her aggressive financial goals to distract from the potentially short season she’s having with her husband,” Mr. Olson said.

Ms. Gallegos is the editor of the Wall Street Journal in New York. Email him at [email protected]

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