Financial fix: Planning a legacy for heirs

marburger.top.jpgMarguerite and Donald Marburger want to leave a legacy for heirs -- and protect their retirement. See what four other families are doing to meet their goals. By George Mannes, senior editor


(MONEY Magazine) -- Donald and Marguerite Marburger lead a comfortable life in retirement, but they still have financial worries.

They fret that their two children and their families, who live near them in the Dallas area, won't be as well off as they are.

More urgently, they worry that Marguerite, a retired schoolteacher, would struggle financially if Don, a former Air Force navigator and later a teacher himself, were to die first.

The loss of Don's full military pension and lower Social Security would leave Marguerite with half the income they bring in now (she'd still collect the teacher's pensions).

What's worse, Don, unnerved by the 2008 market decline, sold virtually all their stocks in October of that year and has been moving in and out of the market ever since.

Marguerite is concerned about Don's health, given the market-induced sleeplessness that Don, normally the calmer of the two, has suffered in recent years.

"I believe stress kills you," she says, "and at our age we don't need any."

THE STATS

Age: Marguerite, 64, and Donald, 67

Occupation: Both retired

Location: Rockwall, Texas

Income: $88,000

Assets: $978,000 in retirement savings; $20,000 in 529 plans (for four grandchildren)

Goals: Protect Marguerite's standard of living if Don predeceases her; leave a legacy for children and grandchildren

THE PROBLEM

As brave as Don must have been to fly missions in Vietnam (and face down a classroom full of sixth-graders), he isn't comfortable with the financial risk he's taking, says Deena Katz, a financial planner who also teaches at Texas Tech University.

He needs a portfolio that will not only meet his goals but also let him sleep at night. The good news: Despite the Marburgers' love for travel, they save $2,500 a month. So they can afford to be much less aggressive with their portfolio.

"You don't have to maximize returns," says Katz. "You only need enough to get you where you want to go."

THE ADVICE

Find a mellower mix: In place of the Marburgers' asset allocation of 62% stocks and 38% bonds, Katz says a mix that's 45% in stocks will be safer yet still provide for Marguerite.

"If the market dropped like a rock," says Katz, "she'd be okay."

Marguerite could withdraw $35,000 a year (and adjust for inflation annually), enough to replace Don's Air Force pension and also leave behind a sizable estate.

But Don fears that mix would threaten his secondary goal of leaving money for heirs. "I don't want to go below 50% stocks," he says. "That's my cutoff."

Make fewer moves: Jumping in and out of stocks, says Katz, "is a good recipe for buying high and selling low." She suggests Don limit his trades to a $100,000 slice of the couple's holdings.

Don, however, can't commit to buying and holding. "Sometimes it's better to stay out of the market," he says.

Look for help now: If Don were to die first, Marguerite says she'd hire a financial adviser. Katz tells her to line one up right away. "When you're going through the grieving process," she says, "that's not a good time to look." To top of page

Just the hot list include
Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.80%3.88%
15 yr fixed3.20%3.23%
5/1 ARM3.84%3.88%
30 yr refi3.82%3.93%
15 yr refi3.20%3.23%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
Company Price Change % Change
Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET

Sections

Bankrupt toy retailer tells bankruptcy court it is looking at possibly reviving the Toys 'R' Us and Babies 'R' Us brands. More

Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.