What is the best way for a widow (age 40-55) to make a $500,000 life insurance last her life time?

Question

I need a plan for my wife, in the event of my death. She has no debt except for a $100,00 mortgage, . and she makes between $1000-$1500 a month. She has very little educationn. So I need to keep it simple for her to implement.

Answer 1

You need to talk to someone trustworthy about some kind of fund that would pay her a certain amount each month, and also have the ability for her to draw out money if she wishes to purchase an item such as a car or holiday.

The money should be invested and she will be able to draw cash from the interest.

$500,000 invested well, at say 5 - 10% annually, should bring in interest of $$25,000 - 50,000 a year, which is more than enough to supplement her income until retirement.

Your wife would be able to withdraw a portion of that interest for her living expenses, while keeping some and adding it to the principal to make up for inflation.

She would also have a house then too, so her assets would be the half million plus the house.

Answer 2

Have her pay off the mortgage, there is no need to pay 5000 in interest in order to save $500-1000 in taxes.  After that she would need to budget herself on about what she makes, payoff all you debt (no debt = no risk).  I would put the rest into safe investments like an IRA, or good mutual funds with a solid track record, and good CD's for quick access.  

Answer 3

You need a certified financial planner.  It's worth the cost if you want to protect your wife.  Choose one who charges an hourly or flat fee not one who earns commissions from the investments he recommends.  You'll get unbiased advice that way.

Answer 4

Appoint a trustee to administer your estate. Or establish a living trust now.

I would also think if she had no mortgage payment 1000 -1500 per month would be ample to live on.

Examine the tax advantages of her paying off the mortgage verses paying over time.

Have her sit down with a financial adviser so she understands where the money is going and why.

I am assuming you have no minor children that would require higher education funding.

I am also torn on whether you are very sweet and caring or trying to control her from the grave.