What comes to mind when you hear the words “horror story?” Probably a book or movie created with the intent to frighten, scare or disgust you.
The intent of the financial horror story I’m about to share is like those of fictional writers; I want to get your attention and generate a reaction, one that could lead to a better future. My goal is not to create paranoia, but to provide some tips to help you avoid finding yourself in such a situation.
Like all scary stories, mine opens peacefully. You and your spouse are enjoying your retirement. Your health is good, and you are doing all the things you dreamed of together. Then, suddenly and tragically, you lose your spouse. As you struggle to deal with your grief, the next trauma comes. You discover that the documents you signed several years ago when your spouse retired don’t have a loophole, and in addition to losing your spouse, you’ve also lost a substantial portion of your income.
You have a vague memory of you and your spouse meeting with the retirement counselor and signing papers. The counselor mentioned a couple of different options that would offer you a portion of your spouse’s retirement should he predecease you, but you weren’t sure what all that meant. You both were healthy and had a small life insurance policy, plus some money in savings. You didn’t have much debt and expected to live the good life well into your 90s. Maybe in your story, you didn’t want to be bothered to go with your spouse to the retirement planning meeting; he simply brought home papers and showed you where to sign.
You and your spouse wanted to have as much money as possible in retirement so you could enjoy yourselves; perhaps you remember thinking that such a small amount really wouldn’t make much difference, so you signed the papers without a second thought.
Along the way, you added some debt you didn’t have at retirement. Maybe your home needed unforeseen maintenance, or you updated your bathroom, kitchen or outdoor living space. Perhaps you purchased a new vehicle or a few “toys.” Maybe you had some health issues that depleted a good portion of your savings.
Now, you’ve lost the love of your life. Your health is not a good as it once was, and your savings have been reduced. The life insurance policy was only a term policy that has expired, and you are left with debts to pay on a substantially lower income. Your dream life has become a horror story. How can this be real?
A signed contract is just that, a contract. Your signature means you understand and agree to the terms. Think of all the times you simply click “I agree” to download or install a new program on your phone or computer. Very few read all the legal terms; we simply scroll to the bottom and click “agree” so we can move on. The same mentality often is displayed when signing financial documents, sometimes to the detriment of the signer. The horror story above is an all-too-true example of how this can hurt you in retirement.
So how can you prevent finding yourself in my horror story?
Recognize that doing it yourself may not be the right approach to properly planning for your financial future; seek the assistance or advice of a professional. A first meeting is an opportunity to see if you connect with him or her. Does this expert take the time to hear what you have to say and answer your questions? Don’t be embarrassed to admit you are unclear about any advice you receive. Allow yourself to ask questions and expect a clear answer. Carefully review all proposals and documents before you initiate or change any financial plan.
Once again, ask questions and expect answers. It is your money and your future. After all, you don’t know what you don’t know unless you ask questions.
Kathy Rogers is the vice president of Marston Rogers Group, a life planner and financial consultant. Reach her at (228) 206-5902 or Kathy@mrg.life.