A physician’s financial advice to his widow

I am the one obsessed about finances in our house. Updating our monthly net worth spreadsheet and ensuring we are not paying mindless monthly fees for things we don’t use (i.e., magazines, Netflix, etc.). I allocate our investment portfolios and ensure that we have paid into our IRAs and 529s annually. It is not that my wife is not interested, it is more that I am very interested.

So why would she not let me take care of this aspect of our lives? If someone is passionate about something, then they are likely to do it well and regularly.

My wife is involved though. We discuss our monthly spending and net worth, our future goals, and why this is important. She is not a big spender. She knows I have a plan, but what if I died? What would my wife do then? Would she know what my plans for our money were?

Many blogs discuss the importance of term life insurance. Buying life insurance provides for your loved ones if the breadwinner dies. My wife will receive $3 million if I die. That amount of money, along with our investments, is a large chunk of change. It is like winning the lottery, but depressing because your loved one just died. Much like winning the lottery, if you do not have a plan for it then you may end up in trouble.

So today I am writing a letter to my hypothetical widow, to discuss what I would recommend she do with such a windfall in the unfortunate situation that I die. I assume she would follow the same path we have thus far, but at the end of the day, she will have to make the decisions. This is just a map down that road.

(Of note, I have left out any of the emotional writings that would obviously come out if I knew I was going to die. This is a personal finance blog and not a telenovela. Still writing this letter left me quite depressed. Even the idea that I could die and not be here to spend time with my loved ones is humbling. The premise of this letter is that we are not financially independent yet. This is our current reality. I will cancel my term life insurances and has a plan in motion once we are financially independent.)

The letter

My loving, beautiful wife,

I cannot imagine how you must feel while reading this letter. Read this letter when you are ready and use it as a map to managing the money that you just received.

First 3 to 6 months

Please take the money that is coming in. The $3 million, and divide it amongst many banks. Remember that the FDIC insures up to  $250,000 per bank. That would mean you should divide the money up amongst 12 banks to ensure that it is safe. Not that I would be expecting a banking crash, but you never know.

Sit on the money for 3 to 6 months. Grieve. Contemplate. Adjust. Figure out what is next. You do not have to make any money moves during this time. In fact, you could sit on the money for a year and still be okay. Just divide it up and keep it safe.

6 months to a year

Decide where you want to live

Now that my job is not our lives tether, think hard about where you may want to live. Would you like to stay in our same town because of our friends or move closer to your parents or sister? Once you have made that decision, you can decide what to do with the house. You can pay it off using $1 million of the cash, sell it and downsize, or sell it and rent for a while (particularly if you move). At some point, I suggest you buy your home in cash. Get rid of all of the debt in your life so you can be free to live it as you wish.

Student loans, if still unpaid

My student loans should be forgiven. Make sure to check with the loan company (Great Lakes in my case) and ensure it is off the books. You do not want to be stuck with a surprise debt in 1 year or have a collection agency called due to this oversight.

Roth IRA

Since we have Roth IRAs, you can rollover my Roth IRA into your own Roth IRA without paying penalties if the funds have been in the account for at least five years. For funds that have been in the account for less than five years, a penalty will be charged. You can consider not touching this account for at least five years after my death and then rolling it over, but in many ways I suggest just simplifying your life and rolling these over into your own account.

You cannot cash out the Roth IRA if you are younger than 59.5 years old without having to pay the 10% penalty. If I am already over 59.5 years and taking my required minimum distribution, then you can continue taking out those funds without a penalty. Let this grow as long as you can as we have already paid the taxes on it up front. You cannot do a schedule change based on your age for the required minimum distributions for a Roth IRA.

Our IRAs have been fully invested into a S&P index fund provided by Vanguard. Keep the allocation the same for now. Later, you can decide on reallocating funds.

(Not for my wife, but for others. If you have a traditional IRA that you have inherited, you can submit a schedule change and take required minimum distributions based on the widow’s age).

Traditional 401(k)

I would recommend you take my 401(k) funds and roll it over into your own account. This way it will be in your own name instead of just keeping it in mine. Let this grow as long as you can and remember you will have to pay taxes on it as you withdraw the cash.

Our 401(k) funds have been allocated in a blend of funds. Keep the allocation the same for now.

Social Security

Don’t forget about Social Security. I suspect it will be around in 30 years when you qualify and if it is you will be entitled to a payout. I suspect my payout would be higher than yours due to salary earned and years of work. Just check with the office. This stuff is complicated and likely to change in the next 30 years, so don’t worry too much about it now.

529 plans
There are both in our son’s name, so there is nothing to do. Just realize that they are there and growing. Feel free to contribute annually, though I think you could just use the cash from the life insurance plans to pay for his education. That way, if he wants to do something other then go to college, there will be no penalty for using the money.

One year mark

I hope that much of the grieving is done. By now you have hopefully decided where you will live and either paid off our home or found a new place to live. You should be debt free as that will provide the greatest flexibility in life going forward. Also, you have hopefully consolidated and transferred my traditional 401(k), and Roth IRA plans into your own or kept them as is and have them marked so as to not forget about them.

Now it is time to think about what to do with the cash you have left in the bank. Hopefully, it will be between $2 million and $2.5 million depending on the home you purchased and what you have spent to live the last year.


Keep six months to 1 year of spending as cash. I suspect this will be between $35,000 to $60,000 depending on how you are living. We spent about $60,000 a year as a family after mortgage and student loan payments. You should not have a mortgage, and thus $60,000 is a very easy mark to meet.

Consider keeping another $100,000 in cash for any investments you may want to do in the future. I am not sure you will want to, but better to have the option open to you for the first few years.


I recommend taking the remaining cash and investing it in an after-tax investments. I would do a three fund portfolio through Vanguard.

The three fund portfolio includes:

Vanguard Total Stock Market Index Fund (VTSMX)
Vanguard Total International Stock Index Fund (VGTSX)
Vanguard Total Bond Market Fund (VBMFX)

Your allocation will depend on how aggressive you want to be, but to start I would recommend doing the following:


As you get older, you may want to invest a larger portion into the bonds portfolio. Also, remember to buy Admiral’s shares any time you can as the expense ratio will be smaller. The lower the expense ratio, the more money you save. Consider reading the Bogleheads’ Guide to Investing to learn more.

As with any stocks, you will have times when the value will be down. Maybe down a lot. Just sit tight and don’t sell. The strategy is to buy and hold. Over the years the stocks will regain in value, and you will see your money grow.

Also, don’t try and buy individual stocks. We are going for simplicity here. That is where the three fund portfolio comes into play. The plan is “set it and forget it.” You can consider looking at the funds once a year and reallocating them. For example, if you are now 85% in VTSMX, 4% in VGTSX, and 11% VBMFX, then reallocate to the 80/10/10 discussed above. Other than that, I would not recommend touching the stocks.

From your loving husband,

So there you go

Quite a morbid thought, but we all buy term life insurance to protect our loved ones. Why would we not leave a roadmap for them to follow too? I hope my wife never has to use this plan.

Also, as we get older and closer to financial independence, I will start weaning down the term life insurance policies we have. I will cut it from 3 million to 2 million and then 1 million. Finally, I will be able to get rid of it completely.

Have you ever discussed a roadmap with your loved one if you die and they inherit a large chunk of cash?

“Dads Dollars Debts” is a cardiologist who blogs at his self-titled site, Dads Dollars Debts.

Image credit: Shutterstock.com

Leave a Comment

Most Popular

Join 150,000+ subscribers

Get the best of KevinMD in your inbox

Sign me up! It's free. 
✓ Join 150,000+ subscribers 
✓ Get KevinMD's 5 most popular stories
Subscribe. It's free.