Rich Widows

It’s sad giving advice to rich widows.

Year after year it goes on. Different client. Same story. They’ve retired, downsized, cashed up and have been sent to us for advice on how to invest and manage their capital. We work out how much of their capital is needed to cover their normal living costs and then I start talking about spending the surplus (I’m a great one for making clients spend their surplus money). And that’s the problem.

What am I going to spend it on Glyn? Holiday? No fun on your own.  Change your car? Why. Give some to your kids? They’ll waste it. I don’t trust my son-in-law. They’re getting divorced. Take your pick from the answers – I’ve heard them all.

OK, OK, I know that sounds like a problem a lot of people would like to have – but just think about it. The person sitting in front of me (and it’s sometimes the widower)

has spent 30 or 40 years working hard, usually in debt, worrying about money and deferring ‘stuff’ until they retire. They’ve now got capital (all in the bank) and are worrying about preserving it (why?) and then one of them dies. They retired too late, didn’t spend money fast enough or one of them died too soon.

Same result. Why didn’t they make these decisions earlier? Change (i.e. retiring) is inevitable and you have two choices – let change drive you or you drive the change.

So let’s end on a happier note with some spending suggestions. Here’s what to do. Work out an investment management plan that balances your life expectancy with the life expectancy of your capital – spread your money carefully, monitor the performance and gradually spend surplus and some capital. Take a friend on holiday and pay for her/him. Take your family on holiday. Set up a travel fund for your grandchildren (provided they work whilst they’re abroad AND they send photos to your iPad each week). Make them remember their Nan whilst you’re alive to hear them say thank you. Give some money to charity. The banks don’t need your money.

Get some pleasure from using it whilst you can see the good it can do. But make an investment management plan first. Money represents your stored labour from earlier years. When are you going to use it? Die broke – it’s called “Controlled Spending”.

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