Bonnie and I had the pleasure of traveling to San Diego between Christmas and the New Year. We arrived just in time to take the trolley to the Holiday Bowl, Cal Bears vs. Texas Longhorns. Cal played terribly and lost. We stayed in San Diego at the beautiful marina for a few days to meet with a new client and then drove north to Orange County to take my 97year-old mom to Knott’s Berry Farm on New Year’s Eve for her favorite chicken dinner.

Complete the Trip: Unpack

When we returned home on January 1, I completely unpacked my suitcase, put everything away, loaded up the laundry, and put my empty suitcase back on the storage shelf. This is a very important practice for me. It helps me to complete my travel and to be at home ready for the next thing. If I leave my suitcase packed or half unpacked, I am still on my trip even though I am really at home. It nags at me; I can’t be effective.

The Stakes of Incompleteness Can Be High

Out of the blue I received a call from a woman who was referred by one of our clients. The woman had just lost her job and at about the same time had received some very bad news about her divorce settlement. She divorced her husband eight years ago, and as part of the settlement she received 40,000 shares of stock in the company where he worked. She also received a significant part of his retirement package, which she could take as a lump sum or an annuity. Out of inertia, bad advice, or no advice, she did not investigate or decide what to do. She left the suitcase packed, in other words.

The reason for the call was that she had just learned that her ex-husband’s company was now in bankruptcy, the 40,000 shares were worthless, and she no longer had the option of taking the retirement assets as a lump sum; she would have to take an annuity.

Be Complete

In my 30-year career as a financial advisor, I have seen many fortunes vaporize because of simple inertia, greed, and/or an unwillingness to pay tax on a realized gain. Tax problems disappear when the price drops below your cost. My advice in these situations is to “take the money when you have the chance.” Do it in a systematic, orderly, legal way, but don’t freeze up and do nothing.

I worked with this woman over the next several days, reading every communication she had received about the new terms of her benefits from the divorce. Annuities are complicated by many choices: Single Life, Life with Beneficiary, Period Certain, etc. I was able to determine the best choice for her situation because she shared all the information I needed. In retrospect, the lump sum option would have been much better for her situation, but that choice was no longer available to her.

This is a painful way to learn an important lesson. In matters big and small, be complete!