Your Retirement Budget After 65: Where $5,000 a Month Actually Goes

Retirement Budget Reality: Retirees Spend $5,000 a Month. Social Security Pays About $2,10

Dollars & Sense Podcast | November 1, 2026 with Christina Lamb, CF2™, and Robert L. Field, CF2™, CFS, NSSA, IRMAACP

Your retirement budget probably looks nothing like your working-years budget, and the numbers may surprise you. Households headed by someone 65 or older spend roughly $5,000 a month on average, while an individual Social Security benefit runs about $2,000 to $2,100.

Rob Field and Christina Lamb walk through where that money actually goes and who covers the difference.

Then the conversation turns to the part of estate planning nobody budgets for: your pets and your stuff. Can you leave $25,000 to your dog? Who gets Grandma’s china? And why does a “stuff plan” matter as much as a will?

What you’ll learn:

• Why housing eats about 36% of retirement expenses even after the mortgage is paid off
• The one spending category that rises as you age while everything else declines — healthcare costs in retirement
• How retirement spending by age moves through three phases, and why one fixed number for 30 years can fail
• The income gap between a $5,000-a-month budget and a $2,100 Social Security check, and where the rest may come from
• The practical budget exercise Rob uses, plus the stress tests Christina adds for rising property taxes, a lost spousal benefit and a major medical event
• Why family heirlooms with almost no dollar value cause the biggest sibling fights, and the three categories of a “stuff plan”
• Why a pet cannot inherit money, and how a pet trust separates the trustee from the caretaker

Rob Field is a Certified Financial Fiduciary (CF2®), Certified Fund Specialist, and the only advisor within 50 miles of Winter Park holding both the National Social Security Advisor (NSSA) certificate and the IRMAA Certified Planning credential. Christina Lamb is an IRS Enrolled Agent – a federally licensed tax practitioner – and a Certified Financial Fiduciary (CF2®), meaning she has completed specific educational training and is legally and ethically bound to act in clients’ best interests at all times. Nelson Financial Planning has served Central Florida families for 40+ years with no account minimums.

Episode Chapters

• 0:00 What Will You Actually Spend in Retirement?
• 3:29 The 3.6% Social Security COLA vs. Health Costs
• 4:31 The BUDGETS Framework for Retirement Spending
• 6:25 Retirees Spend $5,000 a Month. Here’s Where.
• 8:54 The Retirement Expense That Rises as You Age
• 10:33 Social Security vs. Your Budget: The Income Gap
• 11:48 Debt, Stress Tests and Why Averages Mislead
• 17:33 Can You Leave $25,000 to Your Dog?
• 24:28 Pet Trusts: Trustee, Caretaker, Leftover Money
• 30:34 Who Gets Grandma’s China?
• 35:43 The Digital Estate Your Family Can’t Find
• 37:27 Your “Stuff Plan” Homework for This Week

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Podcast Episode Transcript

[00:00:00] Rob Field: Good morning, Central Florida, and welcome to another episode of Dollars and Sense. Your hosts today are myself, Rob Field, and to my left, Christina Lamb. Good morning, Christina.

[00:00:13] Christina Lamb: Good morning, Rob. Hope you’re having fun getting used to daylight savings time today.

[00:00:18] Rob Field: Yeah, it’s, um, the, every time it changes, it just throws me for a loop, and then I slowly get used to it.

[00:00:23] Rob Field: By the time I have it down, another change is gonna occur.

[00:00:26] Christina Lamb: Yep, yep. So make sure, folks, if you didn’t, uh, set your clocks back, ’cause we fall back, that you make that little adjustment this morning. And, uh, anything fun for Halloween last night, or …

[00:00:37] Rob Field: Yeah, I’m not, I’m not big on dressing up myself, but I did go to a party, family and friends, and then I got to see a bunch of little kids.

[00:00:43] Rob Field: I’ve got a granddaughter who’s now two and a half years old. She went as Jessie from Toy Story, so that was kind of fun.

[00:00:48] Christina Lamb: Oh, how cute. That’s adorable.

[00:00:50] Rob Field: Yeah, it was great. How about yourself?

[00:00:52] Christina Lamb: Um, so we do this annual hayride, uh, with, at my parents’ house, and even though my son is now old enough and doesn’t wanna participate, um, I still go, because I just love watching all the little kids, and it’s, it’s a good fun time to kinda see some old friends and look at all the cool costumes.

[00:01:09] Rob Field: Nice. All right.

[00:01:10] Christina Lamb: Yeah. So in some office news, um, we’re starting our annual food and toy drive. It kicks off this month, and it ends with our shredding event on Thursday, December 3rd. Um, our drive supports Second Harvest and Toys for Tots, and it runs from now until the shred day. So you can bring any new, unwrapped toy or any new, unexpired, non-perishable food item to our office to help support our local communities.

[00:01:40] Rob Field: That’s great. Yeah, last year we had amazing turnout, so let’s, let’s get that going again. All right, so for today, we’re very glad you joined us. We are going to address a couple things. First of all, we’re gonna look at your current budget, and then what changes you might expect, uh, as you venture deeper into retirement, how that might affect your budget.

[00:01:56] Rob Field: Also gonna talk about some things that you wanna consider if you’re [00:02:00] gonna dictate how your personal items are gonna transfer to the next generation.

[00:02:04] Christina Lamb: Awesome. But first, let’s take a little minute and touch on midterms elections, just two days away.

[00:02:10] Rob Field: That is true. The midterm election always produ- uh, gets a lot of stuff going on.

[00:02:14] Rob Field: It’s definitely gonna produce gridlock in Washington, ’cause now we’re at this point, we’re at the halfway point between one president and another. Um, there’s, now there’s anticipation of will there be a tax change, what are interest rates gonna do. Republicans think one way, the Democrats maybe another. It could lead to some market uncertainty.

[00:02:31] Rob Field: We don’t think a lot, but it c- could be just a little bouncing around, a little volatility.

[00:02:35] Christina Lamb: Yeah, absolutely. And interestingly enough, 84% of registered voters said that the economy is very important to them in the midterm vote, and that includes concerns about inflation, food, housing costs, jobs, wages, and overall affordability.

[00:02:53] Christina Lamb: Right. I know, kinda going back to my son, he, um- He has a diesel truck, and so he is really [00:03:00] hurting to fill up his gas tank- … as a young’un, kinda just working a little bit, still in high school. So he would, he would like to see some changes there, that’s for sure.

[00:03:08] Rob Field: Sure. But most importantly, just don’t forget to get out and vote.

[00:03:11] Rob Field: I think, uh, today is the last day for early voting in Central Florida. Is

[00:03:16] Christina Lamb: that correct? Yes. I know it is at least in Osceola County, and that’s where I’m at. So, you know, I always like to say, if you don’t vote, you don’t get to complain about our government, and there’s definitely enough, a lot there to complain about, so make sure you get out and vote.

[00:03:29] Rob Field: Excellent points. So let’s kinda jump into some things we wanna talk about. Uh, earlier this month, Social Security announced what the cost-of-living adjustment, or the COLA adjustment, is gonna be going into 2027. So in 2027, we’re gonna see Social Security benefits rise, have a living adjustment of about 3.6%, strong number.

[00:03:50] Rob Field: Last year, in 2026, it was up about 2.8. Year before that was up about 2.5%. So it’s always good to see the increase, but the problem that offsets that is over the last three years, overall healthcare costs have risen by an average of about 5.2%, and even more so, uh, long-term assisted living costs have risen about an average of 6% per year.

[00:04:13] Rob Field: So these type of cost increases, they can be detrimental, especially if someone’s deeper into retirement and having to kind of take care of their medical needs and their assisted living needs.

[00:04:23] Christina Lamb: Absolutely. I think rising healthcare costs are gonna be another really big key point in this midterm elections coming up.

[00:04:30] Rob Field: Definitely.

[00:04:31] Christina Lamb: So let’s, uh, move on to the, to one of the main topics of today’s show, and we’re going to compare the budget you might have, you know, when you were younger and still in growth mode to the adjusted budget that you’re going to experience when you retire as a senior.

[00:04:47] Rob Field: All right, so we’re talking about one of the biggest questions people have as retirement gets closer: what will I actually spend?

[00:04:54] Rob Field: The answer matters because retirement planning is not just about reaching a savings target. It’s about building a [00:05:00] dependable monthly income plan that can support the way you expect you’re gonna live Now, we’ve talked about budgeting a few times on this show. You and I have come up with, used that a lot of times.

[00:05:11] Rob Field: We think that’s important to kind of lead people into making investment decisions. We even kind of came up with that, I like that, the acronym- … B-U-D-G-E-T-S for budgets, and we have each letter stand for something. B stands for balance of your income, expenses. U stood for understanding your current situation.

[00:05:28] Rob Field: D was for debt, short-term and long-term debt. G was for goals, short-term goals, long-term goals. E is for expectations of what your investments and then your longevity, longevity, how long you think you might live. T is for transition, where you’re moving from your work mode to your retirement mode. And then S would be for solutions.

[00:05:47] Rob Field: What are your investing options, and then how do you actually review your budget from time to time? So when we address each of these categories, we start to think about budgeting as a senior, moving into the older age when it’s more important that we kind of [00:06:00] reanalyze what’s going on there. It’s gonna affect our spending based on our goals as those goals change.

[00:06:06] Christina Lamb: Absolutely. And, you know, budgets are, like, the first step in your financial success. So without a good, healthy budget, it’s hard to, you know, save the amount that you need and pay all your bills on time and just kind of keep you focused. So, um, the first number here that we’re gonna talk about might surprise you.

[00:06:25] Christina Lamb: Um, households headed by someone, excuse me, age 65 or older spend about 60,000 per year on average. So that’s roughly a little over $5,000 per month. Some retirees live comfortably on less, while others are going to spend much more, but it gives us a useful starting point. And everybody’s lifestyle is a little different, so that’s obviously going to change how your budget is affected.

[00:06:52] Rob Field: Sure. The key to look beneath that headline number you just shared is there are four categories that consume the typical retiree budget. It’s housing, transportation, food, and healthcare. Now, housing is by far the largest. It averages over $22,000 a year, which is roughly 36% of your total spending. Even when the mortgage is paid off, there are still property taxes, insurance, utilities, repairs, maintenance, and then possible home modifications.

[00:07:23] Christina Lamb: And that’s why I own my own home doesn’t necessarily mean housing is free. A retirement budget should incur reoccurring costs and reserves for expenses that do not arrive every month. For example, you might need a new roof, or the air conditioning goes out, a plumbing problem, things like that. If housing costs are too high, choices of downsizing or relocating, um, have a much larger impact on your discretionary purchases.

[00:07:53] Rob Field: True. So the next is transportation. That’s about $9,500 annually, which is about [00:08:00] 15 and a half percent of your spending. That includes vehicle purchases, the fuel, insurance, and maintenance. Transportation often declines later in retirement as driving decreases, but it can’t be ignored. Many retirees will live in a community where a car is essential or necessary, and so replacing a vehicle can be a major one-time expense.

[00:08:20] Christina Lamb: Mm-hmm. So the next category is food, and food averages about $8,000 a year or close to 13% of the budget. Now, dining out may affect, um, how that, how much people spend, um, but groceries make up a, the larger share of, of that category, and it can be flexible, so you have to pay attention to inflation, sort of like what we’re experiencing now.

[00:08:46] Christina Lamb: Groceries are just costing more. So the budget today may not be exactly what you’re going to be paying in 20 or 30 years from now.

[00:08:54] Rob Field: True. So healthcare averages about $7,800 a year, and that’s roughly [00:09:00] 12.7% of the spending, and that’s the category that’s most likely to move in the opposite direction from overall expenses.

[00:09:09] Rob Field: That’s gonna include the premiums, prescriptions, out-of-pocket services, dental and vision needs, medical supplies, and potentially long-term care. Medicare helps, but it does not cover everything.

[00:09:21] Christina Lamb: And that leads to an important pattern. Total spending generally declines as retirees age, but healthcare spending rises.

[00:09:30] Christina Lamb: The average annual spending is about $64,000 for age 65, and it goes up to 55,000 for 64, and, um, and it keeps going the older you get.

[00:09:43] Rob Field: Those are great points. We’re gonna continue this conversation after a short break. You are listening to Dollars and Sense. Don’t go away. We will be right back. At the break, we were talking a little bit about budgeting and talking about costs for seniors.

[00:09:57] Rob Field: We’re gonna continue that conversation. What we’re [00:10:00] realizing is that retirement is not one flat spending period. Early retirement may include more travel, more hobbies, family activities, and major purchases. But as you kind of get into middle retirement, it’s gonna start bringing a slower pace. You’re gonna have lower transportation costs, and then later in retirement may reduce your discretionary spending while increasing healthcare, caregiving, and home support costs.

[00:10:25] Rob Field: A good plan should anticipate these phases instead of just using a one fixed number throughout the whole time.

[00:10:33] Rob Field: Christina, let’s compare spending with income.

[00:10:37] Christina Lamb: Sure. So a typical retirement household may spend more than $5,000 per month, while an individual Social Security benefit may be around 2,000 to 2,100 per month. Social Security is a critical foundation, but for many households, it will not cover your full budget.

[00:10:56] Christina Lamb: The retirement gap may need, may need to come from [00:11:00] your pensions, retirement accounts, taxable savings, annuities, and maybe possibly, unfortunately, some part-time work.

[00:11:08] Rob Field: That does happen. You have to kinda plan ahead. All right, so this is why income planning has, has become just as important as investment planning.

[00:11:18] Rob Field: Experts often estimate that retirees may need 55 to 80% of their retirement income. I know retirees that would like to have it close to 90 or 95, and that’s fine. We- Well, you wanna maintain a certain standard. Some people wanna even improve it as they head into retirement. But a personal spending plan is more useful than just a broad rule of thumb.

[00:11:39] Rob Field: Two households with the same income can have very different housing costs, different debt, different healthcare needs, travel goals, and different family obligations.

[00:11:48] Christina Lamb: And I think debt really deserves some special attention. Many people enter retirement and still have mortgages, auto loans, credit card debt, and possibly medical balances.

[00:11:59] Christina Lamb: Debt [00:12:00] payments reduce flexibility because they must be paid regardless of what markets or inflation are doing. Before retirement, identify every payment, interest rate, and payoff dates. Reducing excessive debt can improve cash flow and lower the amount of the portfolio that you have to, you know, use each month.

[00:12:20] Rob Field: Sure. Good point. So here’s what I think would be a practical exercise. Start with all of your reliable monthly income, and that would include Social Security, pension payments, other reoccurring sources of income. Then you wanna list your essential expenses. This is gonna be things like housing, utilities, food, insurance, healthcare, transportation, taxes, and debt.

[00:12:44] Rob Field: After that, add in discretionary goals such as travel, hobbies, gifts, entertainment that you might want. Finally, include irregular costs by dividing those annual items into monthly payments for your budget, and then also make sure you’re maintaining, uh, an [00:13:00] emergency reserve.

[00:13:01] Christina Lamb: And then you wanna stress test that plan

[00:13:04] Christina Lamb: What happens if groceries, insurance, or pra- property taxes rise? I mean, I don’t know about anybody else, but I feel like all of those go up for me every single year. So if a vehicle needs to be replaced, what if a spouse dies and now you have one less Social Security benefit? Uh, what if healthcare costs increase faster than expected, or you have a major medical event?

[00:13:28] Christina Lamb: Um, the goal is not to predict every expense precisely. It’s to make sure that there’s a plan in place to be able to have room to adapt to whatever might financially happen to you.

[00:13:42] Rob Field: Sure. Gotta be flexible, gotta be adaptable. That’s, I think that’s, that’s true with budgets across the board, right? Mm-hmm.

[00:13:48] Rob Field: Young people who are trying to, uh, plan for getting married, and having houses, and having kids, on up to people who are now, “I gotta plan ahead so that I can get, uh, my kids through college,” and then when they get into retirement, [00:14:00] budgeting’s still important to make, to match that income to your expenses.

[00:14:04] Rob Field: But I’ll, I’ll give us one final caution. The averages can hide financial stress. Higher income households pull the average upward, while millions of older adults live on far less. So you can’t really compare yourself to what other people are doing or how they’re actually working. So a budget’s gotta be built around your personal resources and not someone else’s average.

[00:14:26] Rob Field: We can help you discuss how to plan, how to make your budget, what your numbers should look like, but it won’t be the same as your neighbor’s or your kid’s or your friend who’s 10 years older. Now, you wanna keep in mind that if necessities already consume most of your income, if you’re finding that the money you bring in is really going right out for just the basics, you’re gonna have to make a little, uh, you know, make a little of an adaption.

[00:14:49] Rob Field: So you’re gonna think about, well, are there some available resources I could tap into? Could I get some assistance, uh, through different groups? Are there different housing options? Possibly that [00:15:00] house that you’re in, may have outgrown it, might be time to downsize. You might not wanna talk about that, but it is something that can occur and might be a way to relieve some financial stress.

[00:15:11] Rob Field: Tax planning’s very important. Just because you’ve retired doesn’t mean that some of the income you have coming in won’t create a tax issue. Social Security is taxable, IRA distributions are also taxable, and then of course, that leads over to good old Medicare, right?

[00:15:26] Christina Lamb: Mm-hmm.

[00:15:26] Rob Field: Income-related monthly adjustment amount.

[00:15:28] Rob Field: I can’t emphasize enough how important it is that you understand the tax side as well as the surcharge you might be paying on a Medicare premium as you’re moving along.

[00:15:38] Christina Lamb: And I think the bottom line is simple: know what you spend, uh, separate needs from wants, uh, plan for healthcare and inflation, make sure that your income sources can cover the gaps, and review the plan regularly because retirement changes over time and spending changes over time.

[00:15:57] Christina Lamb: So you have to accommodate for that flexibility. [00:16:00]

[00:16:00] Rob Field: That’s a great point. So- We, we talk about how important budgeting is, and we’re, we can’t emphasize that you gotta kind of stick to it to the best of, of your ability. But we also don’t wanna say that we want it to restrict your life. The budget is there to help you, to kind of be an outline, to kind of monitor and, and take advantage of seeing where are you spending money, where do you need to spend money, is there a gap, and how do you need to address it.

[00:16:25] Rob Field: So it’s meant to really give you confidence. Our goal today is to have you think about these items, and then to be prepared to be honest with where you’re spending money. Be honest if you’re spending money in some place that you need to kind of pull back a little bit. And then, you know, have these decisions that you make today lead towards a better financial decision for tomorrow, a stronger budget, good income, not have debt.

[00:16:49] Rob Field: We can’t emphasize how important it is- Mm-hmm … that you don’t wanna make debt the answer if your budget’s going over.

[00:16:54] Christina Lamb: Yep. Pre-planning goes a long way.

[00:16:56] Rob Field: It really does. So that’s a, that’s a great topic. We talked [00:17:00] about budget again. Love it when we get to use our acronym, B-U-D-G-E-T-S. You guys can keep that same acronym in mind if you wanna help out to sort of remind yourself the different parts of what we use when we make a budget.

[00:17:12] Rob Field: We’re talking today a lot about retirement, and planning, and legacy, and budgets, and things like that. We are going to tap into a little bit about making decisions as you get older as to where your items may go to. We’re also gonna talk a little bit about where some of your personal things close to you, where do you want those to go to.

[00:17:33] Rob Field: So Christina, when I hear the words estate planning, what’s the first thing y- you think comes to somebody’s mind?

[00:17:40] Christina Lamb: Usually money. You know, where, who gets the investment accounts, who gets the house, who’s gonna get mom’s jewelry or the classic car in the garage.

[00:17:49] Rob Field: No, exactly. But today, we’re gonna talk about something that’s a little bit different.

[00:17:54] Rob Field: Finishing up this segment and going into the next, we’re gonna talk about a little something that [00:18:00] we love that’s curled up at our feet.

[00:18:03] Christina Lamb: My dog?

[00:18:04] Rob Field: It could be your dog. Could be a cat. Could be any animal. Could be your bird, a horse, whatever four-legged, two-legged- … furry, non-furry animal member you run in your household.

[00:18:16] Rob Field: It’s your pets.

[00:18:18] Christina Lamb: And I notice you said those animals run your house. So we’ll get into that a little bit more in our next segment. That’s

[00:18:24] Rob Field: exactly

[00:18:24] Christina Lamb: right.

[00:18:25] Rob Field: Yeah. I’m not in charge when the animals are around. Thanks again for listening. We’ll be back after this short break. You are listening to Dollars and Sense.

[00:18:32] Rob Field: Don’t go away. Be back in a moment.

[00:18:37] Rob Field: Welcome back to Dollars and Sense, where we help you make sense out of all of life’s decisions that involve your dollars. We’re talking a little bit about a subject where you wanna kinda think about your pets. That’s a part of your family. You wanna take care of them today. You also wanna think about taking care of them tomorrow.

[00:18:55] Christina Lamb: But there’s actually very serious financial conversation behind this. [00:19:00] When you’re creating an estate plan, you’re not only deciding who gets your pets, um, you’re also deciding who will be responsible when you’re no longer there, and that on- that does apply to your money, your family, and your pets.

[00:19:13] Rob Field: So today, we’re gonna talk about how to make sure your wishes are clear and that your pets are cared for if something happens to you So let’s talk a little bit about what the issue might be.

[00:19:25] Rob Field: Let’s start with something people might not realize. Can I just say in my will, I’m gonna leave $25,000 to my dog?

[00:19:34] Christina Lamb: No .

[00:19:35] Rob Field: Oh.

[00:19:36] Christina Lamb: And your dog is probably a little disappointed to hear that. I know mine would be. She has very expensive taste. She actually likes to dress up, but … So here’s the issue. A pet cannot legally own property, um, or directly inherit money, so you can’t simply leave your dog as the beneficiary on your IRA or leave your cat the brokerage account.

[00:19:56] Rob Field: Okay. Which brings us to a bigger estate [00:20:00] planning lesson.

[00:20:00] Christina Lamb: Exactly. That’s where there’s a number of ways to define who should inherit your assets. You might name beneficiaries directly on certain accounts, or you might have instructions in your will. You might establish a trust. But whatever method you’re using, the key word is specificity.

[00:20:19] Christina Lamb: Don’t simply think about what’s happening to your assets, think about who is going to be in charge.

[00:20:25] Rob Field: Because someone eventually has to carry out those instructions.

[00:20:29] Christina Lamb: Right, and that’s especially important when you’re talking about a pet. You may say, “Well, my sister loves my dog. Obviously she’ll take care of them.”

[00:20:38] Christina Lamb: But does your sister know that?

[00:20:40] Rob Field: That is a good question.

[00:20:42] Christina Lamb: So she, if she’s agreed, does her housing situation al- allow for pets? I mean, maybe she lives in an apartment and she can’t have any animals. Does she have other animals? Will they get along with yours? Can she financially handle another pet? These conversations you should have now, and not [00:21:00] assume that you want your family pet getting sorted out later on when you’re not there.

[00:21:05] Rob Field: Sure. Yeah, of course. I think this is where people sometimes laugh off the subject. They just simply say, “Come on, it’s just a dog.”

[00:21:13] Christina Lamb: Yeah, but for a lot of folks, it’s not just a dog. That pet may have been some- been there for someone through retirement, a loss of a spouse, children moving away, or any of many of life’s changes.

[00:21:26] Christina Lamb: For some people, the animal is their constant companion.

[00:21:31] Rob Field: And if you’re listening and thinking, “Christina, I know exactly who would take my pet,” that’s wonderful.

[00:21:37] Christina Lamb: It is, but knowing just isn’t enough. Your family needs to know your, your plan. They need to know where your estate documents are. They need to know the reflection of your intentions, and the person you’re selecting needs to understand exactly what you’re asking of them.

[00:21:56] Rob Field: And there’s another practical issue here. Taking care of an animal costs [00:22:00] money.

[00:22:00] Christina Lamb: Absolutely. Food, grooming, medications, boarding, routine, uh, veterinary visits. Older pets could have significant medical expenses. So you’re not just asking, who loves Bella enough to take care of her, you’re asking, have I given the person enough resources and instructions they need to care for Bella, um, the way I would want them to?

[00:22:24] Rob Field: All right. I like Bella. I’ve met Bella, and she’s a- … she’s a lot of fun. I’ve got a … I don’t have a dog of my own, but you have a dog, friends have dogs, family have dogs.

[00:22:33] Christina Lamb: Office

[00:22:33] Rob Field: dog. And we have an office dog. Brady. So this hits close to home. And you, you think about, you know, the dog entertains up in, in HillSis today, but, uh, you know, what happens if, uh, we move forward?

[00:22:45] Rob Field: Will that dog be taken care of? So my question is, what happens if I do nothing?

[00:22:50] Christina Lamb: That’s where things can get difficult. Your family could be left, you know, trying to determine on their own what should they do with the pet, who pays for [00:23:00] the expenses, even what kind of care would you have wanted for your pet.

[00:23:04] Christina Lamb: And imagine making those decisions while you’re already grieving and distraught.

[00:23:08] Rob Field: Now, that’s the part people forget.

[00:23:10] Christina Lamb: Exactly. Good estate planning isn’t just about transferring wealth, it’s about reducing confusion. And if you have very specific wishes for your pet, you don’t want to leave anyone guessing.

[00:23:22] Christina Lamb: Your dog may have a special diet or special medications. Maybe the pet has lived their entire life with another animal, and you don’t want them to be separated. All these details really do matter, just like when you’re creating an estate plan for your actual assets. You, you need to be specific.

[00:23:41] Rob Field: Sure. And just saying, “Give the dog to Cousin Bob,” doesn’t necessarily solve these problems.

[00:23:47] Christina Lamb: No. And there’s another issue. People don’t think about, you know, Cousin Bob may love you, but does Cousin Bob love your dog- … and does he wanna have the responsibility of a pet? It’s a little different than inheriting some [00:24:00] money.

[00:24:00] Rob Field: Right. Or you may think, “You know, that expensive dog food’s ridiculous.”

[00:24:04] Christina Lamb: Exactly.

[00:24:05] Christina Lamb: You may take better care of your dog. Well, you probably will take better care of your dog than anybody else will. So you may gladly spend that kind of money on the best dog food available, but someone else might walk into the gro- grocery store and buy that $15 bag of dog food and say, “Perfect.” So that’s why the person you select matters just as much as the money that you leave behind.

[00:24:28] Rob Field: All right. Okay, Christina, let’s solve the problem. We’ve talked about some of the issues. What can someone actually do to address this?

[00:24:35] Christina Lamb: So one option is to create a pet trust. Instead of attempting to leave your money directly to an animal, funds are placed in a trust to be used for the animal care. This also means you need to think seriously about the person, um, who is responsible in managing those funds, and they may not necessarily be, you know, the same person.

[00:24:56] Rob Field: Okay, so the trustee is managing the money. [00:25:00]

[00:25:00] Christina Lamb: That’s correct, but here’s where it gets interesting. The person managing the money doesn’t necessarily have to be the person that’s physically caring for the pet. That’s exactly what your trust is doing for you. So the, the trustee will be the person that is in charge of the finances for your pet, if you would, and then in your trust, you’re gonna list the person that’s gonna be caring for them.

[00:25:22] Christina Lamb: So they may not be the same person, but then you can this way have someone financially responsible, you know, to pay for that dog food that you want and those medical bills and not worry about them wasting the money. So you can have a trustee who oversees the money and a caretaker who actually takes care of the animal.

[00:25:41] Rob Field: All right. So you would want to have two different people, is that correct?

[00:25:47] Christina Lamb: I mean, possibly. It provides another layer of oversight. I mean, let’s face it, not everybody is good with money. Um, so you imagine if you set aside $30,000 for the lifetime care of your dog, one [00:26:00] person might manage those funds while another one does the actual daily care of the animal.

[00:26:04] Christina Lamb: Now, you essentially have a team making sure that your money and your animal is cared for in the way you want it to be.

[00:26:11] Rob Field: Okay. So I’m guessing the instructions need to be pretty specific?

[00:26:15] Christina Lamb: They can be, about, uh, the things that you wanna tell someone if you’re leaving with your pet, you know, as if you were le- like, going away on vacation for a few weeks.

[00:26:25] Christina Lamb: So you know, what does the pet eat, what veterinarian do you use, medicine, um, how much should we be responsible for spending for medical care, um, listing the pet’s routine. I know my dog is very particular. She likes her routine, and if you skip it, she gets kind of ornery. So you wanna make them happy as well.

[00:26:47] Christina Lamb: So all those instructions can help for future caretake- for your future caretakers to understand your wishes.

[00:26:54] Rob Field: Okay. And then whether someone uses a trust or another estate planning strategy, I imagine this is [00:27:00] where an estate planning attorney becomes important?

[00:27:02] Christina Lamb: Absolutely. You want your documents to be structured properly for your circumstances and understand state laws.

[00:27:09] Christina Lamb: This isn’t something where I’d recommend scribbling, you know, take care of Fido, on a napkin and sign it.

[00:27:15] Rob Field: That’s probably not the strongest estate plan.

[00:27:17] Christina Lamb: Definitely not.

[00:27:19] Rob Field: Okay, so here’s another question I’ve got. Suppose I’ve set aside money for my pet, and eventually the pet passes away, but there’s still money remaining.

[00:27:28] Rob Field: What’s gonna happen to that?

[00:27:30] Christina Lamb: It’s another decision you can plan for. You can name a remainder beneficiary, so this person would receive whatever funds are left after the pet dies. It could be a person, or it could even be an animal shelter, um, or a charitable organization that cares for animals.

[00:27:47] Rob Field: I like that idea, ’cause you, you, you got your love for one animal that could ultimately help other animals later on.

[00:27:55] Christina Lamb: Exactly. And more importantly, you get to make that decision instead of leaving it up [00:28:00] to someone else.

[00:28:01] Rob Field: Okay. So let’s give everybody that’s listening kind of a quick checklist.

[00:28:06] Christina Lamb: Sure. So I say we probably have five things which, um, w- when we get back from the break, I think we can go over those in a little bit more detail.

[00:28:16] Christina Lamb: Um, so you’re listening to Dollars and Sense with Nelson Financial Planning.

[00:28:23] Rob Field: Welcome back to this episode of Dollars and Sense, where we help you make sense out of all of life’s decisions that involve your dollars. We’re having a conversation today a little bit about planning for your pet after you may pass away. Christina, we were … Before the break, you were kind of giving me, uh, kind of a quick checklist of what people might wanna keep in mind.

[00:28:42] Christina Lamb: Yeah. So we have five questions to ask yourself. Number one, who will care for my pet when I’m gone?

[00:28:50] Rob Field: All right, you gotta actually talk to that person.

[00:28:52] Christina Lamb: Absolutely. You wanna make sure that they know their responsibility. Number two is gonna be how much money might [00:29:00] realistically be needed for my pet’s care in their lifetime?

[00:29:03] Christina Lamb: Number three is do I want, uh, one person handling everything, or do I want separate people acting as trustee and caretaker? Number four is what specific instructions would I want the caretaker to follow? Think about food, medical care, grooming, et cetera. And number five, if money remains after the pet passes away, who or what organization do you want it to go to?

[00:29:31] Rob Field: And if you don’t mind, I’m gonna add a sixth question. Is that okay?

[00:29:34] Christina Lamb: Sure. What’s that, Rob?

[00:29:35] Rob Field: Do people need to know about this plan, that it actually exists?

[00:29:40] Christina Lamb: Perfect, because the best estate plan is in, um, in, in the world, if you have the best estate plan in the world, if you don’t tell anybody and explain it to them, they may not be able to implement it properly.

[00:29:54] Rob Field: That’s great. Yeah. Our love of pets carries over. You know, like you’ve mentioned, we have an office dog. You’ve got a pet. [00:30:00] I’ve got friends with pets. I like to dog sit. But a lot of people think, you know, I’m enjoying the dog this year and while I’m alive, but it is good to c- think a little farther ahead about how that pet, if it outlives you, will be cared for.

[00:30:13] Rob Field: Great, great topic. I’m glad we brought that up. So when we’re talking about inheritance and leaving items or dogs or people to, uh, somebody into the next generation, we’re gonna talk a little bit about some of the items other than cash, other than investments, that may actually be, um, important and to talk about and to plan ahead.

[00:30:34] Rob Field: So we do talk a lot about inheriting the IRA, inheriting an investment account. We talk about with the house, the life insurance, but I got another question for you today. May seem a little corny, but who gets Grandma’s china?

[00:30:49] Christina Lamb: Oh, Rob, now you’re really getting into some dangerous territory.

[00:30:55] Rob Field: Yeah, definitely.

[00:30:56] Rob Field: Um, let’s forget the investment account. [00:31:00] You got two siblings, we know they can agree on how to divide up $100,000. But if we had Grandma’s wedding ring, set that on the table, and it had not been decided, suddenly we’ve got a family feud.

[00:31:12] Christina Lamb: And that’s what makes this such an important topic. When people think about estate planning, they naturally focus on assets with the largest dollar signs, but some of the hardest things to divide may be things that are not necessarily worth much financially at all.

[00:31:28] Rob Field: Like maybe the family Bible.

[00:31:30] Christina Lamb: Y- Mom’s favorite Christmas ornament.

[00:31:31] Rob Field: Sure. How about Dad’s watch?

[00:31:33] Christina Lamb: Grandma’s recipe and photographs, military medals, a piece of furniture that’s been in the family forever.

[00:31:41] Rob Field: Or of course, Grandma’s china, which everybody says they want until someone asks, “Okay, but are you actually gonna use it?”

[00:31:48] Christina Lamb: Exactly. I personally have two sets of china in my attic- … um, that I’ve never used. I mean, we try u- They, they- You can’t even put them in the dishwasher or the microwave. Like it’s, it’s not, not really practical. [00:32:00] So anyways, um, and that’s our question for today. What happens to all the stuff when you’re gone, and how do you make sure that things that you love don’t become the things that the family fights over?

[00:32:13] Rob Field: Okay. So let’s say I have a will. I’ve done my estate planning. Doesn’t that take care of all of this?

[00:32:21] Christina Lamb: Not necessarily. Your estate documents may give you instructions for distributing your property, but that doesn’t mean your will is going to indi- individually list every, you know, lamp, painting tool, piece of jewelry, photograph, gun, collectible, whatever the case may be.

[00:32:38] Christina Lamb: So depending on the applicable state and how your estate documents are drafted, there may be ways to leave a separate written instruction for certain tangible property, but those details should be coordinated with your estate planning attorney.

[00:32:53] Rob Field: Because I’m guessing writing everybody’s name on masking tape and then sticking that underneath a piece of furniture, that’s not really considered an estate [00:33:00] plan?

[00:33:00] Christina Lamb: Now, it might tell your children what you wanted, but it wouldn’t substitute for actual legal planning.

[00:33:08] Rob Field: All right, fair enough

[00:33:11] Christina Lamb: And there’s another problem that people don’t think about. We assume our children want our stuff, but, you know, sometimes they don’t.

[00:33:19] Rob Field: Wait a minute. You mean my kids might not want my collection of VHS tapes?

[00:33:25] Christina Lamb: Rob, I hate to be the one to tell you, but this actually happens all the time. Sometimes people have saved things for years, like maybe a dining room set or a collection, you know, that they’ve had forever, and then the kids just don’t want it, and the kids are thinking, “What are we gonna do with that?”

[00:33:44] Rob Field: That’s an important distinction, too. Something can mean a lot to you without having tremendous financial value or even the same sentimental value to your children.

[00:33:52] Christina Lamb: And some- exactly. And sometimes the opposite happens. Sometimes you may think something is ins- insignificant, but it [00:34:00] carries an enormous amount of meaning to your children.

[00:34:03] Christina Lamb: Dad’s old fishing pole, that might be worth $25, but to his son it represents every Sunday morning they spent fishing together.

[00:34:11] Rob Field: I think this is where people need to give themselves some grace, because this does get emotional.

[00:34:16] Christina Lamb: Absolutely, very emotional. Thinking about when these decisions are typically having to be made, someone just has lost a parent or a grandparent, and they’re grieving.

[00:34:28] Christina Lamb: They may be exhausted. There may be many siblings who have … live in different states and bring different memories and family emotions to the table.

[00:34:38] Rob Field: All right, and then now somebody says, “Well, Mom told me she wanted me to have that.”

[00:34:43] Christina Lamb: Exactly, and someone else says, “No, no, Mom told me I should have it.” Neither person may be intentionally causing trouble.

[00:34:51] Christina Lamb: Mom may have actually said that to both of them at different times.

[00:34:56] Rob Field: That’s why relying on everybody to remember a conversation from eight [00:35:00] years ago probably is not gonna be a good strategy.

[00:35:02] Christina Lamb: Right, and I think parents sometimes avoid the conversation because it feels uncomfortable. Nobody wants to talk about death, and we don’t want to ask our children, “What do you want when I’m gone?”

[00:35:14] Christina Lamb: And we really don’t want to discover that nobody wants our china.

[00:35:18] Rob Field: Poor Grandma’s china, having a rough show today.

[00:35:21] Christina Lamb: It really is, but there can be something actually positive about having the conversation. You might want to learn that your granddaughter loves the necklace that you wear, or that your son treasures your old toolbox, or someone wants your handwritten recipes.

[00:35:38] Christina Lamb: That gives you an opportunity to tell them the story behind them while you’re still here.

[00:35:43] Rob Field: Okay, so again, I asked this question earlier, what happens if you do n- nothing?

[00:35:49] Christina Lamb: At the very least, we leave a lot more work for the people we love. Someone has to go through the house. They have to decide what to keep, sell, donate, and throw away.[00:36:00]

[00:36:00] Christina Lamb: For those items with meaning, financial value, somebody may need an appraisal. And if family members disagree about who should receive something, that disagreement can be much more significant than the actual value of the item.

[00:36:14] Rob Field: So we’re potentially leaving our kids hundreds or thousands of decisions at exactly the time they’re least emotionally prepared to make them.

[00:36:22] Christina Lamb: You know, that’s a great way to put it, Rob. And there’s another cost that’s harder to measure, relationships. I would hate to see siblings damage their relationship over a piece of jewelry or an antique. Unfortunately, we see that from time to time in our office.

[00:36:38] Rob Field: Right. Uh, and then there’s everything else we own, right, that’s not sitting in the living room.

[00:36:43] Christina Lamb: Yes, and this is becoming increasingly important. Think about your digital property. Um, where are your family pictures stored? Is everything on your phone, cloud storage? Uh, what about email accounts, social media, subscriptions? [00:37:00] There’s a lot.

[00:37:00] Rob Field: Sure. So today’s estate inventory, it’s not just house, car, and checking account.

[00:37:07] Christina Lamb: Not even close. Our finan- financial lives have become digital, and increasingly our mem- memories have, too. If you are the only person who knows where something is, um, how it, how to access it, um, your family could have a very difficult time sorting everything out.

[00:37:24] Rob Field: Okay. You’ve convinced me. How do we fix it?

[00:37:27] Christina Lamb: I’d suggest creating, uh, what I jokingly call a stuff plan. Start with walking through your home, um, not a catalog of every spoon or bath towel, but identify things that fall into a few categories.

[00:37:41] Rob Field: Like, what kind of categories?

[00:37:42] Christina Lamb: I would say, uh, financial value items first, like jewelry, artwork, um, antiques, firearms.

[00:37:50] Christina Lamb: Uh, next, sentimental value items, and then also consider your digital property.

[00:37:55] Rob Field: Sure. And then what comes after that?

[00:37:58] Christina Lamb: Um, to have that [00:38:00] conversation with your grandchildren and your children. It’s important to discuss it.

[00:38:04] Rob Field: Great. Hope you’ve enjoyed today’s show. Tried to share some ideas about budgeting, talk a little bit about how to dictate where assets and pets might go later on in your life.

[00:38:14] Rob Field: We appreciate you tuning in. You’ve been listening to Dollars and Sense. Remember, we have no account minimums, full staff of certified financial fiduciaries at your beck and call to help you with your investment needs going forward. Enjoy the rest of your weekend.