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Life Expectancy & Expenses
Old 03-21-2014, 09:14 PM   #1
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Life Expectancy & Expenses

An interesting article that's making me wonder about the potential over conservatism in our spend plan. We primarily use Fido RIP and have 92yo and 94yo set as life expectancy for myself and DW, respectively. Per this article, that's clearly too conservative, and I need to evaluate alternative scenarios. I also noted that RIP reduced DW's expenses by only ~5% upon my demise, which seems like way to small a decrease.

Hmmm. Maybe she's planning on a boyfriend after I'm gone.

Summary:
The bottom line, though, is simply this: when setting a time horizon for a retirement plan, there should be differences in the planning assumptions for single individuals versus married couples. In addition, it's crucial to recognize that while there is a high likelihood that at least one member of a couple lives for several decades in retirement, the odds are also very high that it will be only one of them for much of that time period - not both - so be certain to plan and adjust projected retirement expenses accordingly!

Life Expectancy Assumptions In Retirement Plans - Singles, Couples, And Survivors | Kitces.com
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Old 03-21-2014, 10:14 PM   #2
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... I also noted that RIP reduced DW's expenses by only ~5% upon my demise, which seems like way to small a decrease.

Hmmm. Maybe she's planning on a boyfriend after I'm gone.
Five (5) percent seems low, but if the surviving spouse keeps living in the same home, incurring the same utility bills, etc..., then the savings may not be that much. The most cost reduction would be in healthcare, I think. And then, when you are gone, it costs extra money for someone to take care of the "honey do" list that you are doing now, unless that someone is living under the same roof.

But hey, when you are gone, why should you care?
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Old 03-21-2014, 10:24 PM   #3
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It is surprising to me to see the detailed planning for husbands dying before their wives here. And the men worrying about the widow's life going forward. All good stuff though and I plan the same way.

Reality being what it is, there is a good chance that the widow will hook up with the next guy with hairy legs and, hopefully, a funded retirement.

I am (DW and I) living in a 55 and over community with a widow in each house next to me who's husbands died within the last few years and left them flush $$$$. One widow is "seeing" a guy and that is going very well, from what she says. The other.....early dementia and just a son coming by to help her out.

Small sample, I know, but something to think about. I'm pretty sure if I popped off tomorrow my wife would remarry. She is attractive, younger than me, not quite as worn out, and energetic.....and with the $$$$ I would leave behind, it would surely fund her hunting expedition.
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Old 03-21-2014, 10:28 PM   #4
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NO, not a hairy guy! I am not hairy and my wife certainly does not like hairy guys!
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Old 03-21-2014, 10:41 PM   #5
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NO, not a hairy guy! I am not hairy and my wife certainly does not like hairy guys!
(I said hairy legs)
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Old 03-21-2014, 10:45 PM   #6
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Aww, what the heck! As I said, when we are gone, what do we care?
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Old 03-22-2014, 02:24 AM   #7
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Originally Posted by aja8888 View Post
It is surprising to me to see the detailed planning for husbands dying before their wives here. And the men worrying about the widow's life going forward. All good stuff though and I plan the same way.

Reality being what it is, there is a good chance that the widow will hook up with the next guy with hairy legs and, hopefully, a funded retirement.

I am (DW and I) living in a 55 and over community with a widow in each house next to me who's husbands died within the last few years and left them flush $$$$. One widow is "seeing" a guy and that is going very well, from what she says. The other.....early dementia and just a son coming by to help her out.

Small sample, I know, but something to think about. I'm pretty sure if I popped off tomorrow my wife would remarry. She is attractive, younger than me, not quite as worn out, and energetic.....and with the $$$$ I would leave behind, it would surely fund her hunting expedition.
What? They don't bury surviving wives with dead husband anymore?
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Old 03-22-2014, 05:27 AM   #8
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... I also noted that RIP reduced DW's expenses by only ~5% upon my demise, which seems like way to small a decrease....
Taxes go up considerably when filing as a single.
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Old 03-22-2014, 07:07 AM   #9
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Taxes go up considerably when filing as a single.
Yep, RIP seems to account for that.

After reviewing expenses more closely, I'd estimate that they will go down by ~15% upon the demise of the first of us (likely me); that's about half of our discretionary expenses, and three times the spending reduction used by the RIP tool.

I did a quick FIRECalc analysis of this and, if I did it correctly, accounting for the earlier demise of one member of a couple and what seems a more proper ~50% reduction of discretionary expenses upon such demise, only adds about 2% to the allowable starting spending level (at 90-100% success rates). So, perhaps this is much ado about nothing.
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Old 03-22-2014, 02:09 PM   #10
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Yep, RIP seems to account for that.

After reviewing expenses more closely, I'd estimate that they will go down by ~15% upon the demise of the first of us (likely me); that's about half of our discretionary expenses, and three times the spending reduction used by the RIP tool.

I did a quick FIRECalc analysis of this and, if I did it correctly, accounting for the earlier demise of one member of a couple and what seems a more proper ~50% reduction of discretionary expenses upon such demise, only adds about 2% to the allowable starting spending level (at 90-100% success rates). So, perhaps this is much ado about nothing.
If it adds to your WR, so much the better. For us it was our worst case. Significantly less SS income, potentially a small pension lost, and higher taxes at the single rate (unless you are all Roth at that point) combined with expenses that were definitely not halved.
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Old 03-22-2014, 03:18 PM   #11
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It is surprising to me to see the detailed planning for husbands dying before their wives here. And the men worrying about the widow's life going forward. All good stuff though and I plan the same way.
Interestingly, that was my first thought too.

Most of us here plan very conservatively and our spending levels give us a satisfactory (happy?) lifestyle, so diddling with life expectancies doesn't seem to be that important.

But many of the couples here seem to have one partner who is significantly less informed about the financial planning than the other. I am in that boat. DW professes interest, but doesn't make the time to learn. I started writing a "how to" some time ago & should return to it.
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Old 03-22-2014, 03:37 PM   #12
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I use age 100 to plan my savings drawdowns. Very conservative, but I prefer to think of it as one of my LTC cushions...

Oh, and I used this: http://gosset.wharton.upenn.edu/mort.../CalcForm.html to determine that my statistical life expectancy is about 86. I use that age to plan for the contingency of preceding my wife in death, and to schedule income streams to make up for some less-than-100% survivor benefits.
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Old 03-22-2014, 03:37 PM   #13
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I assume that I'll die first and my wife will spend about 2/3 of what we spend together.

The general reasoning is that she will stay in the same house and incur the same TUMIR expenses. However, food, medical care, and clothing will all drop by 50%.

Transportation and entertainment will fall by almost 50%.
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Old 03-22-2014, 03:48 PM   #14
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I've done projections on how expenses would change if it was only me left or DH left. (DH is almost 7 years older than me so statistically I am far more likely to be a widow).

I think how much expenses change depends upon how divergent each of the couple is in their spending priorities.

For example, to find a house that met DH's laundry list of must haves and that met my laundry list of must haves, we had to spend more than if we were only meeting one laundry list.

For example, it is important to DH to have at least an acre of land. So, when we were looking we only looked at houses that had an acre. But, if it was just mean, I don't really care about that. Likewise, having a nice kitchen with certain amenities is very important to me. DH doesn't care. He would be fine with a small kitchen with laminate counters and a range. But, I wouldn't be fine with that.

So, either one of us would have much lower expenses if alone because we could each find a much less expensive home that would meet each of our personal list of must haves.
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Old 03-22-2014, 06:25 PM   #15
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One thing I've noticed in the gym is, men over 40 seem to lose their leg hair, even as hair starts growing (or getting thicker) in other places (back, nose, ears....). Too bad women don't lose their leg hair the same way.

So, she may have trouble finding a hairy-legged fellow unless she goes way young.

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(I said hairy legs)
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Old 03-22-2014, 07:32 PM   #16
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So, she may have trouble finding a hairy-legged fellow unless she goes way young.

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Old 03-22-2014, 10:47 PM   #17
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Several Decades past retirement seems like an exaggeration based on the longevity chart unless people are retiring at 30 now. I would think this is family history based more than anything else. If grandparents or parents or siblings are living past 90 I'd worry about it, otherwise not.
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Old 03-23-2014, 10:14 AM   #18
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Several Decades past retirement seems like an exaggeration based on the longevity chart unless people are retiring at 30 now. I would think this is family history based more than anything else. If grandparents or parents or siblings are living past 90 I'd worry about it, otherwise not.
Just last night, our son came by with a friend who is helping her grandmother in an assisted living transition. GM is already in a nice place, but will need to move because some of her funding is running out. GM is well into her 90's, "she didn't think she'd live that long."

The statistics say I'll croak at 86. That's what I'm expecting, but I'm planning for 100 because nothing that I expect ever comes true...
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Old 03-23-2014, 10:24 AM   #19
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ggbutcher, what does your family history tell you? statistics never apply.
In my family: 3 generations ago (the ones that never went to DR or Hospital except to die) lived to late 80s. 2 generations ago made it to early & mid 80s. My parents are one gone at 75 & the other, extremely healthy one, had a major medical incident early 70's and at mid 70s is struggling to maintain independence.

Based on that I plan towards very comfortable retirement planning through 85 & very frugal thereafter if for some odd reason I live that long.
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Old 03-23-2014, 11:43 AM   #20
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One thing I've noticed in the gym is, men over 40 seem to lose their leg hair, even as hair starts growing (or getting thicker) in other places (back, nose, ears....). Too bad women don't lose their leg hair the same way.

So, she may have trouble finding a hairy-legged fellow unless she goes way young.

A.

Amethyst, are you spending more time checking out the guys than you should be? Unfortunately, I noticed you didn't mention anything about hair growing where it should be....on top of the head...


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