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Old 09-06-2015, 07:13 AM   #21
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I am not averse enough to interject wise thoughts on the entire process, but I have one thought that needs further exploring as it can be a possible big unexpected negative.... Don't assume anything concerning SS whenever the words "government pension" and "WEP" are mentioned together. Obviously she is needing monthly income and I would want a firm grip on what exactly the WEP will do to this earnings stream. There is a WEP calculator on the SS website. Very kind of you to help in the planning process. This could really save a possible financial hardship down the road, as 62 is still very young. Sent from my iPad using Tapatalk
Mulligan is right. DH is a federal retiree who also had earnings that were taxed during his life so he was subject to WEP at the time that he claimed SS. As I recall there is a max WEP credit so it isn't that big a reduction to the SS check. However there is something known as Government Pension Offset that I think is the bigger issue. If your Sister has a government pension then her SS would be offset to a large degree in her spousal claim on her DH's SS. But did has DH arrange for a Survivor's benefit on his own pension that would benefit your DS?

On the overall issue that your sister faces it would seem that the biggest assistance you could be to her would be to help her establish a budget that matched her income which would include her pensions plus a wd from the investment portfolio of 3-3.5%, so if her pension/SS is 30 and the 3.5% wd is another $8k-$9k then she has to live on $39,000; definitely doable. She may hate to move again but may need to downsize the condo in order to reduce her expenses to within that level.
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Old 09-06-2015, 10:04 AM   #22
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Mulligan is right. DH is a federal retiree who also had earnings that were taxed during his life so he was subject to WEP at the time that he claimed SS. As I recall there is a max WEP credit so it isn't that big a reduction to the SS check. However there is something known as Government Pension Offset that I think is the bigger issue. If your Sister has a government pension then her SS would be offset to a large degree in her spousal claim on her DH's SS. But did has DH arrange for a Survivor's benefit on his own pension that would benefit your DS?

On the overall issue that your sister faces it would seem that the biggest assistance you could be to her would be to help her establish a budget that matched her income which would include her pensions plus a wd from the investment portfolio of 3-3.5%, so if her pension/SS is 30 and the 3.5% wd is another $8k-$9k then she has to live on $39,000; definitely doable. She may hate to move again but may need to downsize the condo in order to reduce her expenses to within that level.

That very well could be true, Golden and needs to be investigated. The GPO and WEP are evil twin sisters! After reviewing "the damage" WEP will do to my SS, I amused myself to see what kind of benefit I could draw through my GF on SS if we got married.... GPO calculator said..."If you are looking for additional money, go get a job, as you are not getting a penny here."


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Old 09-06-2015, 11:54 AM   #23
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Thank you for all of your kind words and suggestions.

I spoke with her daughter today to explain the situation so she is aware. She was glad my husband I are helping her as she knows nothing about finance.

My sister did data entry at the state level - Job and Family Services. There are no consulting gigs. She cannot return. We will have to start looking for some other jobs - in an office or retail. One step at a time.

We are all going to Octoberfest tonight so may mention a few things. I feel the immediate goal is to unload the time shares or at least get them rented. I will work with her on a budget.

It's interesting that our parents were depression farm kids who had nothing when they married, lived simply and frugally but enjoyed their lives, worked hard and lived well below their means. I am a professional (first one in my family to go to college) and my husband has done well in agra sales. We both are rather frugal and live well below our means. My sister and her husband lived beyond their means and did not realize it. She hasn't realized yet that her budget needs to change as her spending is unsustainable.

Wish me luck in this process. I will keep you posted.

Another question for the forum --

Do you think she should take some of her money, say $70,000, pay toward the mortgage and re-amortize so the payments are lower?
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Old 09-11-2015, 07:55 AM   #24
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Another question for the forum --

Do you think she should take some of her money, say $70,000, pay toward the mortgage and re-amortize so the payments are lower?
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Old 09-11-2015, 09:30 AM   #25
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Another question for the forum --

Do you think she should take some of her money, say $70,000, pay toward the mortgage and re-amortize so the payments are lower?
That is almost 1/3 of her remaining nest egg. Do you know her well enough to determine if she can cutback immediately or will the 70K go as everyday overspending until it is gone? If you think she doesn't have enough control to cutback, then that might be a good use of 70K, as it would take it out of her control and give her more spending on a monthly basis. That would really be the only reason to take a step like this, and does she have 70K in after tax money readily available?
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