mortgage, younger husband, and disability question
Hi Terry! After talking with way too many 'professional planners' who don't seem to get what I'm talking about, my best friend suggested I contact you. (best idea she's had in a while.) Here's my situation: I'm married to a great guy who is 10 years younger than me. He works full time. I work on a freelance basis with some part-time thrown in seasonally. I like what I do and have no intention of stopping. We have a lovely home that is worth about $275K. Our mortgage, $1200 per month, is set to be paid in full in 5 years. We currently owe about $60K. To meet our obligations (we have very little debt), we need both of our incomes. If I die before he does, all bets are off. However, if I become disabled and can't work, I want to set things up so that he can handle our house on his income. So, to get to that point, I've thought of three options - please tell me what your opinion is: 1 - Take cash out of our retirement account and pay off house now. We have about $150,000 in that account. 2 - Refinance mortgage to a lower monthly payment and leave retirement funds alone. I've been quoted 4.75% for 15 years = $560 per month (which he can handle on his own) 3 -Just keep paying our regular mortgage and hope I don't become unable to work This is probably a no-brainer for you but I'm really concerned because I do not want to be in a situation where I can't work and would have to pick up and move if I was ill. That situation would be difficult physically and emotionally at that point. Our intention is to stay in our home. Life insurance to pay off the mortgage only works if I'm dead and I'm trying to avoid that. Geeze, who knew marrying a younger man would be so complicated. Do you have any ideas? There have to be other women who make more money than their husbands and are ladies of a 'certain age' who are thinking about this. Your suggestions and wisdom will be greatly appreciated. Thanks!
Terry Says
OK, I can see you're stressed over this -- but honestly it has absolutely nothing to do with the fact that your spouse is 10 years younger! Every woman reaches a certain age where she is more worried about being incapacitated and impoverished before she dies, than about death itself. The age difference just makes you more aware of this issue. Actually, you should be more worried about HIM becoming disabled or dying, which is far more likely since men have shorter life spans! There are a couple of ways to deal with this. First, you could take out a disability insurance policy. That would be expensive, since you'll want a policy that will pay if you can't return to your "own occupation" -- which is hard to define for a free lancer. And you know that if you are completely disabled, you can apply for Social Security disability income. Whatever you do -- DO NOT refinance your mortgage to a 15 year note, if you are about to be mortgage-free in 5 years! That would be a HUGE mistake. Instead, focus on earning MORE for the next five years -- and saving the extra money! If you're a freelancer, go out and look for at least a job with a higher wage or more benefits. Talented workers are in great demand these days of low unemployment. Go back to work full time! That will ease your fears more than anything else. Put the "extra" money IN THE BANK in a money market deposit account. Having money in the bank is a great way to ensure you sleep better at night, worry less -- and live longer! (Plus, if you -- long shot-- do become disabled, you will have solved your financial problem in advance!)
