Taking care of your surviving spouse

[friar1610]

The discussion of the military Survivor Benefit Plan (SBP) on Nords' recent thread on military insurance got me re-looking just how well my wife will be provided for in the event I predecease her (which, actuarially speaking, I am likely to do.)

Just curious what plans other retirees have made for their surviving spouses' financial situation and what percentage of your current (joint) retirement income they are likely to have to live on.

My disclosures: military SBP and survivor SS will provide about 43% of our current AGI, inflation adjusted. But since we live on about 70% of our AGI, she will have about 60% of our current spending level covered with that amount. I also have a VG variable annuity which she will inherit and, depending on her age and its value when she annuitizes it, it should add another 18% or so (not inflation adjusted), taking her to 78%. She should be able to make up any remaining shortfalls with a sensible withdrawal rate from the portfolio she will inherit. So, barring an unforeseen catastrophe or black swan event, I feel reasonably comfortable that she will be OK.

I'm really interested in what contingency plans others have in place as I'm always happy to reconsider whether or not I've planned as well as I can.

Thanks.

[Danmar]

My pension pays 100% to my spouse if I predecessor her. Obviously the portfolio and divs will continue so she will continue to enjoy the same income both post and pre my departure.

[Danmar]

Quote:

Originally Posted by Danmar My pension pays 100% to my spouse if I predecessor her. Obviously the portfolio and divs will continue so she will continue to enjoy the same income both post and pre my departure.

Forgot that she will get a mid 6 figure life insurance payout on my death as well.. Looks like she will have more money once I'm gone.

[REWahoo]

If I go first I calculate DW will have 95% of our current income. That's assuming she follows our existing plan and doesn't ramp up withdrawals looking for a replacement. If she goes first I will have about 80%.

[W2R]

F and I are not married, and have not pooled our funds. So, if one of us passes away, the other's financial position can only increase (by whatever amount we choose to leave to the survivor).

[bbbamI]

My DH would be better off if I die first. He would get a pop in his pension, wouldn't have to pay my medical premiums, other medical costs, food, clothing, etc.

[Sue J]

DH retired from public service with a pension in 2010. We took the 100% to surviving spouse option so my income would stay the same and would still include his COLA. The 100% to surviving spouse payment is 88.9% of what it would have been if he took the single option.

At the time we were told that I'd also be able to continue the subsidized health insurance after DH's death, but they are changing all that and dropping the subsidy and access to any coverage for all spouses (whether the retiree is dead or alive) starting in 2014. They say they can do this because the health care benefit is not mandated or guaranteed, even though it's been a provided benefit since around 1970.

Like many other retirees, health insurance costs are the big, ugly unknown.

This year we get by on 90% of the pension payment and have a 10% cushion because we keep our expenses very low, but that will change as they screw around with the health care.

If I was left alone I could easily get by on the pension payment plus DH's life insurance. Also, I will have a small SS benefit at 62 or if I don't need it I may wait on that. If I die first his pension payment increases to the amount he would have had as a single person, he'd have the retiree subsidized health care (unless they screw with that, too) and my small life insurance policy. He cannot collect on my SS as he gets a government pension.

[FIREd]

There is currently a concern regarding a potential drop in retirement income for my wife if I were to pre-decease her. I am planning to address this potential issue by using term life insurance.

[kumquat]

Quote:

Originally Posted by Danmar Forgot that she will get a mid 6 figure life insurance payout on my death as well.. Looks like she will have more money once I'm gone.

Feeling nervous yet?

[Danmar]

Quote:

Originally Posted by kumquat Feeling nervous yet?

Not yet but I will have to stay on my toes. She would make a very attractive, wealthy, widow.

[T-bird]

Once March of 2013 comes both DW and I will be SIRE'd. We have adjusted pensions for 50% to who ever is left standing!! So we feel good about what each of us will be operating on when that happens, hopefully a long way off. DW is 56 and I will be 58 when I retire so looking forward to some good years as both of us have good health presently. About 100K each way in life insurance if one goes before 86 yoa for her unlimited for yours truely (pension bene) SS at 62 to add to the mix and still able to do without hitting other assets to live on. Flipping the switch to start hitting those funds is what we are looking at now. I will say that is a nice problem to have.

T-bird

[akck]

I'll be taking the 75% survivor option on my pension (highest available), and she'll take the 50% option on hers (I won't need as much). She'll also inherit my IRA (I'll inherit hers, I assume). I'm guessing her expenses will go down at least 25% as long as she lives for one person (i.e., doesn't try to finance a son's life), even more if she downsizes the house (plus she'll have the equity differential). While we both have life insurance, there's a good chance we'll cancel once we're both retired. We definitely won't renew the term policy.

[panacea]

If I die first, DW gets my Social Security benefit (which is higher than hers), our life savings, and if she's lucky the payout on my term insurance if I die in the next 16 years before we FIRE. If she dies first, there's a little life insurance but I'd probably downsize the house and maybe w*rk a little longer... just kidding about w*rking longer.

[NYEXPAT]

My wife is 30 years younger than I, so I will likely go first. I will leave her a plane ticket to Miami and American citizenship and then it is up to her to find another sucker, geezer Gentleman of means!

[rescueme]

Quote:

Originally Posted by NYEXPAT My wife is 30 years younger than I...

Sounds like a thread by itself!

[MichaelB]

Quote:

Originally Posted by NYEXPAT My wife is 30 years younger than I, so I will likely go first. I will leave her a plane ticket to Miami and American citizenship and then it is up to her to find another sucker, geezer Gentleman of means!

How do you "leave" American citizenship. As you have indicated previously she hasn't lived in the US so she's not eligible for SS survivor benefits unless she relocates. Even with US citizen family members she still needs to go through the same process everyone else does.

[Mulligan]

Quote:

Originally Posted by W2R F and I are not married, and have not pooled our funds. So, if one of us passes away, the other's financial position can only increase (by whatever amount we choose to leave to the survivor).

W2R, If my memory is correct you have an offspring. If that is correct we are in similar situations. I have no intention of remarrying, but down the road, I will need to address how my assets get split up. I certainly would like my daughter to get some, but I would not want my SO to be left without any either as she will not have a lot on her own. I am one of those idiots that don't have anything written down. If I died today, I would prefer my daughter get everything. But if me and GF are still together in our 60s, that would mean we would have been together 20 years which would make me want to provide for her too. A situation that will have to be resolved one of these days.

[W2R]

Quote:

Originally Posted by Mulligan W2R, If my memory is correct you have an offspring. If that is correct we are in similar situations. I have no intention of remarrying, but down the road, I will need to address how my assets get split up. I certainly would like my daughter to get some, but I would not want my SO to be left without any either as she will not have a lot on her own. I am one of those idiots that don't have anything written down. If I died today, I would prefer my daughter get everything. But if me and GF are still together in our 60s, that would mean we would have been together 20 years which would make me want to provide for her too. A situation that will have to be resolved one of these days.

Yes, I need to see a lawyer and get a will drawn up. It will be very simple; $X to Frank and the rest to Christina. I wanted to just use one of those willmaker computer programs, but almost all say in the fine print that they don't make Louisiana wills. Louisiana has very weird laws because they are based on Napoleonic code.

I was waiting until after the move to Missouri to so that I could do it myself with one of those computer programs, but now that we are probably staying here I guess I have to spring for an actual lawyer to draw up a will.

[Gumby]

Should I predecease her after we retire, my young wife will have all of our joint portfolio, a substantial insurance payout, and a valuable house. She has her own fairly generous pension. The only thing she won't have is my social security, which we are already counting at zero for planning purposes. I think she'll be okay. Actually, she'll be rich and done with my sorry @ss -- even better than okay.

[Alan]

DW will get 50% of my pensions and we have life insurance sufficient to plug the gap if she chooses to annuitize the payout. I also plan on delaying SS until I'm 70 to maximize survivor benefit.