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

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 fixed4.36%4.24%
15 yr fixed3.39%3.26%
5/1 ARM3.36%3.27%
30 yr refi4.34%4.22%
15 yr refi3.38%3.24%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,408.54 -16.31 -0.10%
Nasdaq 4,095.52 9.29 0.23%
S&P 500 1,864.85 2.54 0.14%
Treasuries 2.72 0.08 3.19%
Data as of 12:37am ET
Company Price Change % Change
Bank of America Corp... 16.15 0.02 0.12%
Facebook Inc 58.94 0.00 0.00%
General Electric Co 26.56 0.44 1.68%
Cisco Systems Inc 23.19 0.16 0.69%
Micron Technology In... 23.91 1.43 6.36%
Data as of Apr 17

Sections

General Mills has scrapped a controversial change to its fine print that some read as eliminating customers' right to sue the company. More

Obamacare sign ups hit 8 million, though final enrollment remains to be seen. More

Office for iPad move is a symbolic victory for Nadella's Microsoft, but the company is still weighed down by many of the same old issues. More

Schwinn, Trek and Cannondale are all iconic American bicycle brands. But none of them are made in the United States. More

Getting people to donate money is a big business, and some universities, hospitals and other nonprofits are rewarding their top fundraisers with as much as $1 million to bring in the big bucks. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.