My Son-in-Law Told Me How to Save for the Future. But Now I Think He Actually Meant His!

Pay Dirt Photo illustration by Slate. Photo by Jacob Wackerhausen/iStock/Getty Images Plus. Pay Dirt is Slate’s money advice column. Have a question? Send it to Kristin and Ilyce here. (It’s anonymous!) Dear Pay Dirt, I am a 60-year-old widow. I recently met with a new financial advisor. She said that with no debt and my current assets (my house, two rental duplexes, a traditional pension, a 401(k) worth just under $1 million, and several hundreds of thousand dollars in savings/CD), I could retire now and continue to live my life in my lower-cost midwestern area. Plus, I could “live it up a little,” including getting a new (not used) pick-up, restoring my high school car that I still have, and doing other stuff on my “wish list.” As long as I don’t spend like a drunken sailor, I should be OK. With the multiple reports/scenarios she ran on my life expectancy, if I retire today, I should have about $1 million left to pass on to my daughter. My advisor’s concern (and mine now) is, why do I have a $500,000 term life insurance policy that I just renewed last year? She questioned why, in my financial position, would any ethical insurance agent sell me that policy as I already have a paid-for whole life policy. The reason is that my insurance agent (and my quasi-financial advisor) is my son-in-law! I was always advised by him to keep maxing out my 401(k) contributions, work until at least 67 years old, only buy used vehicles, and to be careful what I spend my money on because I need to keep sa. He has a very good idea of my total net worth. In the back of my head I think my daughter and her husband are having me save up for THEIR future. The way things are going, if I follow my son-in-law’s advice, there is a good chance they would get over $2 million when I pass away. I don’t want to call out my daughter and her husband on this, but I feel I was (still am?) being taken advantage of with their advice. I am sure it will raise suspicions with them when I ask to have that term policy canceled. How do I handle this? —Bad Financial Advice From Family? Dear Bad Financial Advice From Family?, Let’s start with what life insurance is actually for: replacing income that other people depend on. If you die and someone can’t pay the mortgage or feed the kids, you need coverage. At 60, widowed, debt-free, with an adult daughter and a net worth north of $2 million, nobody depends on your income. You almost certainly don’t need term life insurance. Now let’s be fair to your son-in-law. Max out the 401(k). Work until 67. Buy used, not new. Be careful what you spend. That is textbook solid advice. You followed it, and it’s precisely why you’re now in a position to retire early and still leave your daughter a million dollars. He steered you well and seems to have had your best interests in mind all these years. Which is why I’d ask him about the policy rather than assume the worst. “My financial planner flagged the term policy. Walk me through your thinking. Why did you recommend it?” There may be a reason you haven’t considered: estate liquidity so your daughter isn’t forced to sell the duplexes, or state estate tax planning. If the answer holds up, keep the policy. Term insurance is relatively cheap, and at your net worth the premium is noise. If the answer doesn’t hold up, cancel the policy. There’s no need for accusations or unpleasantness in this conversation. Then turn to the real work. Add up your recurring income, including pension, Social Security when you claim it, and net rental income from the duplexes. Compare that to what you actually spend. My guess is you’ll be drawing very little from that $1 million 401(k), which changes everything about what you can do. From there, as your financial advisor pointed out, the question isn’t whether you can afford to retire. It’s how you want to spend these years: buying a new truck, fixing up your old high school car, planning a trip you put off. Spending money now on time and experiences with friends and family is worth all the scraping by you did earlier in your life. —Ilyce Classic Prudie My sister has a bad habit of dumping her daughter on our mother and me without any warning. (Dad isn’t in the picture.) She will just show up and drop my niece off on the doorstep. She classifies it as “family bonding,” while I call it bad parenting. Never miss new Slate Advice columns Get the latest from Prudie and our columnists in your inbox each weekday, plus special bonus letters on Saturdays. Advice Personal Finance Relationships