Welcome to Ask the Bills, where every two weeks Helaine Olen answers readers’ questions about their most nagging personal finance and financial etiquette dilemmas. Seeking advice on a money issue? Email firstname.lastname@example.org.
My father passed away last year and left me $1,000 in his will. We were not close, and he was not a rich man, but he always paid his bills on time. Always. His lawyer’s office informed me he would be in probate for seven months—which I’ve heard is normal to pay off outstanding bills—and if there is any left, then it will cut the checks. The problem is his lawyer is best friends and a business partner of my father’s brother. The two of them are known in my hometown for some very sketchy financial dealings. Since I did not attend the funeral and have had zero contact with the family in years, I would not put it past them to just say there was no money left and deny his last wishes. If they do tell me there is no money left to pay my inheritance, how do I know what they are saying is on the up and up?
It sounds like your father disappointed you in some major and profound way while he was alive—the lack of contact and the fact that you didn’t attend his funeral are something of a giveaway. No matter how troubled the relationship was, it seems he did love you and wanted you to remember him in the best manner possible. I doubt he would have bequeathed money to you otherwise. So try to think of him that way, even if it turns out his choice of estate supervisor results in one more emotional wound. No one picks a crooked executor on purpose, after all.
Unfortunately, it’s true that there are executors who, uh, help themselves to monies from the estates they’re supposed to be overseeing. How much power you have to stop it—if this is indeed what’s going on—depends on the size of the estate, as well as the state the will is being probated in, says Liza Hanks, the author of The Mom’s Guide to Wills and Estate Planning. In general, you can request probate records at the local county courthouse. In that paperwork, the estate’s assets and liabilities are laid out in an easy-to-understand fashion. There is, however, an exception, and it sounds possible your father’s will would fall under it. It’s something called the small estate limit. That means the law considers the estate too small to need to go through the formal, court-supervised probate process. The size of the estate eligible for this loophole varies by state. To qualify in Alabama, for example, an estate cannot be worth more than $3,000—after that, it needs to go through formal probate. In California, on the other hand, it’s $150,000. If this is the case, your only recourse if you suspect something funny is going on is to hire a lawyer to investigate—something, needless to say, that will cost more than $1,000. Unfortunately, I think your best course is to simply hope that the executor plans to do right by you.
I’m ex-military, went to college, and have no debt other than substantial student loans. I’ve worked almost my entire working life in a field I love, but there’s no money in it. I have no savings and no 401(k) or any retirement money at all. I am 50, and I don’t see the value, in the 20 years or so I have left of working, in changing fields or jobs, when increasing my income would kick in raised student loan payments and basically leave me destitute. I don’t think I can save enough in the time I have left to put anything aside to make it worthwhile. I have always lived on the thinnest of margins, not unhappily, for I have always had what I needed and could buy my daughter the things she has needed as she grew, but I don’t want to be a burden to her or the government when I am older. Any advice?
A few years ago, when I was in doubt about a major decision, I turned to a therapist for advice. Was I, I asked, too old in my early 40s to take a career change? Would I seem ridiculous? And what if it didn’t work out? Well, the therapist responded, you can be 40 and say you didn’t do certain things, or 50 and say you didn’t do certain things, or 60 and say you didn’t do certain things. But you don’t get to go back. You can only go forward. (I never did make the change, but it’s advice I never forgot.)
So where do you want to be when you turn 60? Do you want to have some savings? After all, even a small amount set aside is better than no money put away at all. If so, you need to get started. Save some money every month. If you have a workplace retirement plan, sign up for it. (As in now. Today. Like right after you read this.) If you don’t, set up an individual retirement account at Vanguard or T. Rowe Price and arrange to have money automatically sent to it from every paycheck. (Again, do it now.)
As for the job, well, I’m going to throw it back on you. I don’t know what you do for a living, if it’s something that can easily translate to a somewhat less meaningful but more lucrative career. But if it is, is that change something you really want to make, or is it something you think you should consider? There are clearly psychic benefits to your current job, and giving those up won’t be easy. You need to want to start anew. It’s too competitive a job market out there for anyone to get away with phoning it in at a new career, especially after the age of 50. Age discrimination is a real thing. On the other hand, if an entirely different field is something you want to try, consider going for it. Keep in mind that student loan debt isn’t forever, and it’s possible you can pay it off and still have years left to put other savings aside. At some point your daughter will hopefully not need your financial support, and that too will free up more money for savings—or maybe just not living on the thinnest of margins. One word of caution: I wouldn’t suggest making the change if it involves acquiring more student debt. You are 50 years old. You need to pay down the student loan bills you are responsible for, not pile more debt on.
Finally, I need to address one last point. In no way does accepting government benefits mean you are a “burden” to society. There are things you are entitled to, and among them are Social Security and Medicare in your senior years. If your need for such things means you are a burden, well, so too are many elderly Americans: About 40 percent would enjoy incomes that put them below the official poverty line if they didn’t receive Social Security benefits. Don’t ever think that way again.
Ever since my first job at 22, I’ve contributed to my employer’s 401(k) plan. I always qualified for employer match. I also have a Roth IRA, which I max out every year. I now work for a company that doesn’t offer a 401(k) but plans to do so sometime in the future. While waiting for that to happen, what are my options for saving when I’ve already maxed out my Roth IRA? I am 35, have four months of emergency savings, and my only debt is my vehicle loan. I know some people who use a health savings account when they have maxed out their 401(k) limit, but the only ones I could find seem to keep those funds in a savings or money market account, which don’t offer much in the way of potential growth. Your advice is much appreciated.
Goodness, I’m not sure you need much advice from me! You seem to have it all financially figured it out. Just to make it clear how A-plus you are at this personal finance thing, you should know that for all the attention the press pays to IRAs, relatively few Americans actually make use of them on a regular basis. According to the Investment Company Institute, the lobbying arm of the mutual fund industry, only 14 percent of households actually made contributions to IRAs in 2015.
So no surprise, you are quite right: Your other option for tax-deferred growth is a health savings account. There are a few caveats: Your workplace health insurance plan deductible must be at least $1,300 for one person or $2,600 for a family. In addition, if you need to withdraw that money for any other reason than a qualified health expense, you’ll pay a 20 percent penalty. As you probably know, the equivalent number for an IRA is 10 percent.
As for finding an HSA, that’s not hard. In many cases, employers offer the accounts at work, to be used in tandem with the health insurance plan. But if your employer doesn’t do this—and I’m guessing yours does not, since it also doesn’t offer a retirement plan—you can turn to outside providers. And, yes, there are options for investing. If, for example, you visit the page for HSA information on the Vanguard website, it suggests opening a plan via HealthSavings Administrators.