Bruce Williams
http://www.jewishworldreview.com --
DEAR BRUCE: My father is in his 80s and refuses to write a will, as does my mother -- and they are both worth a great deal of money.
They say that it isn't necessary because they have a friend who is a banker and he has been instructed to pay their bills when they are gone.
How do I handle this? -- A Reader in Kansas
DEAR READER: Many people refuse to execute a will because it is effectively saying that they are going to die. While we all know it intellectually, nobody wants to admit it emotionally.
You might tell your dad that if he dies without a will that two-thirds of everything that he has will not go to your mother but rather to the children. If he's parsimonious, you can also tell him that it's a whole lot more expensive to die without a will than with one.
What that banker you mentioned is thinking, I will never know. He may or may not be a friend, but he is certainly giving your folks lousy advice. Everyone needs a will, particularly those who have significant assets or minor children.
DEAR BRUCE: I am a 45-year-old woman, married with no children, and I have $875,000 invested in mutual funds. I am not currently employed but have been in the past. My husband, who is employed, will not retire for five or six years and will receive a pension as well as money from investments when he does. My broker says I can't retire at my age and he feels that I should not be receiving monthly checks from my mutual funds at this time. According to him, I will outlive my money or not live as comfortably as I would like after retirement. Given this minimal overview, what advice would you offer regarding the timing of my retirement? -- S.K. Michigan
DEAR S.K.: The big thing that you neglected to talk about is your standard of living. If you need to maintain your yacht and private airplane, I would agree with the broker -- there is no way that you could do this.
On the other side of the coin, if you can live comfortably on your husband's income or $100,000 a year, then I don't think that you will have any problems at all.
You will have to figure out what you expect out of retirement. Your current investments should kick-off somewhere between $90,000 to $125,000, conservatively, without ever touching the principal. If you combine this with your husband's pension and his other investments, it seems that you should be able to live quite comfortably.
DEAR BRUCE: Our offer on a home has been accepted. We have perfect credit and we were pre-approved by two large banks.
The problem is that we only want to pay 3 percent to 5 percent down. Is there any practical advice that you wish to offer? -- D.C. (e-mail)
DEAR D.C.: It occurs to me that the strong likelihood, even with your perfect credit, is that you will have to buy private mortgage insurance.
Assuming that you have the 20 percent for the down payment, is it outperforming the cost of the private mortgage insurance, including the initial premium as well as the monthly premium? In most cases the answer will be no.
Lenders have the right to ask for more security then 3 percent to 5 percent. A slight hiccup in the market and a lot of homeowners would be "upside down" and would be giving their keys to the bank. Not a very desirable outcome from their perspective.
If you do not have the appropriate down payment then this discussion is academic, but if you do, then do the arithmetic and see what works best for
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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01/21/00: Strategies for paying off debt
01/20/00: Is 15-percent growth achievable?
01/19/00: Selling a second home
01/18/00: Running from a time-share
01/14/00: Don't be a spendthrift!
01/13/00: Who gets the house?
01/11/00: It all depends on size of estate
01/06/00: Check references before hiring an advisor
01/04/00: Savings bonds a bad investment
12/31/99: Out of state ain't that great
12/29/99: Warranty rip-offs
12/27/99: Checking up on investment handlers
12/23/99: Options good only when company's strong
12/20/99: Capital gains tax sometimes best
12/17/99: Don't give up your nest egg
12/15/99: Small-claims court no panacea
12/13/99: Termite company not liable for termites?
12/10/99: Services provided must be paid for
12/06/99: How do we minimize house-sale gain?
12/06/99: Maximize your tax shelter!
12/02/99: My neighbor won't maintain even a modicum of civility
12/01/99: Long-distance rentals a bad idea
11/29/99: Mortgage strategy A-OK
11/18/99: Students can work and learn
11/16/99: Value is what will sell
11/11/99: Y2K: No big deal for real estate
11/08/99: Real life is tough luck
11/03/99: The right time to cash a savings bond
11/01/99: Slow road for savings accounts
10/29/99: What do you want from insurance?
10/27/99: You have a right to see your tax forms!
10/25/99: Why own a house at 65?
10/22/99: Online fine, but CDs?
10/20/99: Love, honor -- and separate credit
10/18/99: Find the value of your stocks
10/15/99: Property lien prevents trade
10/13/99: Clear up debt, only then tie the knot
10/11/99: If it ain't broke...
10/04/99: Should I stick with the company IRA?
10/04/99: Get a financial education!
10/01/99: Insurance: Not much one person can do
09/30/99: Lost tickets are lost cash
09/29/99: Trusting only one financial planner
09/27/99: Adult children should help out
09/24/99: Tips for first-time home buyers
09/21/99: Use the rule of 72s!
09/17/99: Legal strategy can be a pain
09/15/99: Teen drivers drive up insurance
09/13/99: Always use an attorney!
09/10/99: Whose taxes are they, anyway?
09/08/99: How do I roll over my 401(k)?
09/03/99: How can I work out my IRS payments?
09/01/99: When your company can't pay you
08/30/99: Beware of shady viatical investments
08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...