Originally Posted by ats5g
Good point about the taxes. I re-did the calculations using the semi-correct fed and state taxes:
If we don't include inflation, I get something like $158,017 ending vaule [before taxes], which works out to $1,986 a month at age 85. I still think this could be deal breaker, given the spouse could've had $4,712 at 85. Especially since this whole pension max thingee was supposed to protect the spouse even though the husband took the single life annuity.
It's a risk - but the only scenario in which it is a potential risk is if the husband lives past age 85 (approximately a 50% chance) and if the wife lives past 85 (approximately a 50% chance). The cumulative probability of these two events occuring (assuming the two subevents are independent) is 25%.
So the wife would have a 25% chance of being potentially at risk (the husband could still outlive his wife under this scenario and survivor benefits would be a non-issue - what are the odds that an 85 y.o. male would outlive an 85 yo female - maybe 30%?).
On the flipside, the term life insurance has a 50% likelihood of paying out $700000.
Sounds like a dice roll in the end.