Last week my wife left me and the kids for the week so that she could fly home to visit her dad, who is battling cancer. Before leaving she took some time to write a note for me with a detailed breakdown of what needed to happen daily for each of our four kids, as if I didn’t already know their schedules.
I scoffed at her list initially, but by the end of our week without her I’d come to rely on it. Being a single parent and working 40+ hours per week isn’t easy and her list eliminated a lot of stress for me. Because of her list I didn’t have to spend too much time or energy trying to remember things that I already knew. It was very helpful!
Today I’m going to try and return the favor by publishing this open love letter to my wife, letting her know what I think should be done from a financial stand point should I pass away unexpectedly and leave her alone. She already knows all of this, but having it all in writing will, I hope, reduce some of the stress she’d be feeling if I were to check out early.
Table of Contents
- WHAT TO DO IF AND WHEN I DIE
- FINANCIAL ASSETS
- WHAT TO DO WITH ALL THAT CASH
- YOU’RE FINANCIALLY INDEPENDENT
- YOU’RE ALSO PERSONALLY INDEPENDENT
- I LAVA YOU!
- WASTE OF TIME
WHAT TO DO IF AND WHEN I DIE
Mandy, I love you. You’re smart, funny, kind, witty, and compassionate. You’re a fiercely dedicated friend, wife, and mother. You’ve got a look that’s the perfect mix of girl next door meets sultry temptress. In short, I think you’re perfect! The kids and I are lucky to have you in our lives!
I’m so happy that you and I met and started dating in high school – that means that I’ve been able to spend the majority of my life with you.
Do you realize that this year marks a tipping point of sorts for us? As of our anniversary later this year, you and I will have lived with each other longer than we lived with our parents. That’s crazy! Time flies when you’re having fun, right?!
I hope we’ve got at least sixty more years together – the fun and trouble we’d get into as a feisty old couple is going to be epic! But, should something happen to me between now and then I want to make sure that you’re taken care of in every possible way.
So if I die within the next ten years here’s a list of financial steps I’d like you to take. I’m sure things will be crazy and hectic and emotional if something does happen to me, so hopefully this list will remove some of your stress by allowing you to not think about money.
From a financial perspective, I’m ready to die and you’re going to be just fine. You’ll never have to worry about money again. From a mental perspective, I’m not even close to being ready. There are a lot of things I still want to do with you and the kids, but should I pass, you’ll be set. You’ll be receiving a significant amount of money from the following three sources.
1. LIFE INSURANCE
Our term life insurance policy will pay you three quarters of a million dollars within 30 days of my death. Until that money gets deposited into your checking account, there’s more than enough money in checking and savings right now for you to pay whatever needs to be paid.
This $750,000 is going to make you financially independent and will be making your life very comfortable. I take a great deal of comfort knowing that you’ll not be left wondering how to pay for groceries, or how you’ll afford school clothes for the kids. This money also means that you won’t need to leave the kids for 40 hours per week as you head back into the workforce.
2. SOCIAL SECURITY
On top of the lump sum payout that you’ll receive from my life insurance policy, if I die this year you’ll get a total of $4,165 per month in Social Security benefits; this money will keep flowing for the next 10 years. Based on the age of our kids today, you’ll get that $4,165 each month until 2026. In mid-2027 the amount will be reduced to $3,568 per month as kid #3 turns 18. Then in late-2028, when our youngest turns 18, the amount will be reduced to $1,784 per month; you’ll get that for the rest of your life.
Basically, you don’t have to worry about money for the next 10 years (and even after that you’re going to be just fine).
On top of the life insurance money and Social Security benefits, we’ve also got a small IRA with Vanguard, an investment account with Fidelity, and a 401(k), also with Fidelity. There isn’t a ton of cash between these three accounts, but the amount isn’t insignificant either. For now, don’t worry about these three accounts, but know that they exist. Below I’ll tell you what I’d do with this money.
WHAT TO DO WITH ALL THAT CASH
Between the life insurance payout, Social Security, and our investments you’ll be financially independent. Basically, you’re rich and if you’re wise with this money, which I know you will be, you’ll never have to work again if you don’t want to. You’ll be free to focus all of your time and attention on yourself and the kids. There are only two things I think you should take care of in the short term:
1. PAY OFF OUR REMAINING DEBT
Depending on when I kick the bucket, our car loan will be the only debt you’ll have. Pay off that loan the day your life insurance money gets deposited into your checking account. You can ignore my student loan because that’s going to be wiped out by my death and won’t be a concern of yours. This is one of the reasons we’ve never paid it off.
2. BUY A HOME
I can’t think of many reasons for you to stay in Washington. We’re only here to pursue opportunity and if I’ve passed away, it’s time for you to move away. Go home. Be around our large network of family and old friends. Buy a house there and pay cash for it.
Look, I know your tastes and you’ll be tempted to buy an amazing, brand new modern home. You’ll definitely be able to afford the home you really want, but I don’t want you to spend more than half of the life insurance money on a home. That amount of money won’t buy you the house of your dreams, but it’ll get you something very nice, which you’ll own outright. You can spend the rest of your life designing the home however you’d like it. Spending half (or less) on the home will leave you in a position to remain financially independent and that, more that anything, is what I want for you.
If you only spend half on a home, I’d put the remaining $375,000 into our account at Vanguard. Allocate 80% of it into VTSAX (the Vanguard Total Stock Market Index fund) and put 20% in VBTLX (that’s the Vanguard Total Bond Market Index fund). The stocks will provide you with growth. The bonds will provide some stability for the inevitable ups and downs that the market will throw at you.
3. OUR OTHER INVESTMENTS
Sometime within a year of my passing, move everything that’s currently with Fidelity over to Vanguard as well; use the same 80/20 distribution mix.
Once that money is safely invested at Vanguard, you can and should forget about it until 2027; that’s the year your Social Security payouts will start to drop. Until that time, your monthly Social Security payout will be more than enough to cover your minimal expenses.
Really the only expenses you’ll have at this point will be home insurance, property taxes, utilities as well as food and clothing for you and the kids. Social Security will be paying you $4,165 per month. Honestly, you’ll have way more than you need to get by and there should be no reason to touch your investments at Vanguard; let that money go to work for you.
Instead of dipping into your investments right now, live off Social Security – it’ll be enough to live a better life that you’re living today. You’ll even be able to get a (modest) second car for the kids. Decorate the house however you want. Take killer vacations. Basically, live it up and create memories while the kids are still living with you.
YOU’RE FINANCIALLY INDEPENDENT
With zero debt, a paid off house, very few living expenses, and nearly a half million invested with Vanguard (which will be growing by the year!), you my dear, are financially independent and that brings me so much peace of mind!
You’ll pretty much be able to live off of the monthly Social Security payout until you’re 50. By that time our youngest will have one foot out the door. At that time the Social Security payout will be down $3,578 per month, still enough to live on, but that amount will drop to $1,784 once the youngest turns 18. At that point, it will be time to start withdrawing from your investments at Vanguard.
When our youngest is 17 years old, set up a call with an advisor at Vanguard and tell him/her that you’d soon like to start withdrawing 4% of your portfolio in equal monthly installments. Have that money deposited into your checking account each month.
Where your monthly income used to come solely from Social Security, the majority of it will now come from your investments. By this time, the value of your account with Vanguard should be somewhere between $750,000 and $1,000,000 bucks.
Withdrawing 4% per year from your investments, on top of the $1,784 per month you’ll be getting from Social Security should allow you to continue to live whatever life you’d like and you’ll never run out of money. When you pass away, there should also be a decent chunk of money, on top of your paid off house, to leave our kids for an inheritance.
YOU’RE ALSO PERSONALLY INDEPENDENT
If I die early you’ll have enough assets at your disposal that money shouldn’t ever be a concern. You should be able to live an amazing life. Housing shouldn’t be a concern. Work will be optional. Basically you’ll be able to live whatever type of life you like.
I hope you’ll enjoy the hell out of life! Be the cool mom to our kids. Be the cool grandma to their kids. I don’t want you to be lonely, but if and when you do find my replacement, he is NOT to benefit financially from my early demise. Whomever you end up with better be financially independent because he won’t be skating by on your money! Listen to this comment I made to the Stacking Benjamins crew about this very topic:
— Stacking Benjamins (@SBenjaminsCast) January 30, 2017
I’m only half joking. 🙂 You’ll still be young and you’ll be flush with cash – don’t let some sleazeball weasel his way into your life. To be safe, you should probably just tattoo my name across your forehead and commit right now to a life of celibacy if I die early.
I LAVA YOU!
I’m not the most romantic guy. I don’t express my feelings well. I’m best at showing my love through actions. Taking care of you and the kids even after I’m gone is the best way I can think of to show you all how much I love you. I hope this is better than flowers and chocolates for Valentine’s Day.
Before I wrap this up, let me take care of a couple of other housekeeping items.
- My coffin. You know I’m frugal and I swear to the Almighty (whom I really hope exists, because I’d really, really like for there to be something after this life) that if you buy some ridiculously priced coffin for me I will haunt you till the day you die. I’m not kidding. Buy the cheapest box they’ve got – consider it one of my dying wishes.
- My funeral. No sadness please. Throw a celebration party.
- Change of plan. I think this love letter will be most useful to you in first couple of years after I’m gone. Once you’ve gotten back onto your feet and settled into a groove I expect that you’ll reassess your situation and do whatever is best for you. This letter is intended to help you make some big financial decisions in the immediate aftermath of my departure. This will help you get you started, which is the most important thing you can do. If later on you decide that a different plan suits you better, then by all means, change the plan!
WASTE OF TIME
I hope this entire letter has been, and will forever be, a colossal waste of your time. The only thing that would make me happier than you getting to live the financially independent life of your dreams, would be me getting to live that life with you. Side by side! Raising hell together till we’re 100!
While I’m still alive and kicking I’m doing all I can to make the FI-LIFE possible for us as soon as possible! But until that time comes, I hope you know how much I love you and that I’m loving the journey with you.
And of course this love letter isn’t all you’re getting for Valentine’s Day! I’ve got one more gift for you – I’ll just need you to wash off your forehead and meet me at the local tattoo parlor.
I really hope my life insurance becomes the worst investment I’ve ever made. But even if I never have to use it (fingers crossed), it still brings me peace of mind and helps me sleep well at night. Do you have a plan should you or your partner die prematurely?
PS: Mandy, I’m not kidding about the cheap coffin. Don’t splurge. I. Will. Haunt. You!