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Old 08-23-2021, 09:46 AM   #81
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Good topic.

If DH goes first I will continue to get his pension at 100% and that includes the COLA, fixed at 3%. His HRA will stop, it's around $300/mo now and dropping to $250/mo next year. In addition to the pension, I'll still have my SS and part time income if I'm still doing that.

If I go first he will not get anything from my SS due to GPO. His pension will get a "pop up" at my death due to it no longer being reduced to benefit a survivor.

His pension supports us nicely now and all the rest is gravy so either of us should be able to be fine as a widow/widower. Some household expenses would drop but others would stay the same. If I'm left alone I'm hiring out the yard work and snow plowing.

I have 3 IRAs. The Traditional is small and I plan to convert to Roth in the near future. The Roth is bigger and my understanding is that at my death it becomes his and is treated like it was always his. He'd start RMDs at 72? due to the recent changes, right?

The 3rd one is an Inherited IRA, from my Dad. I've been taking RMDs since 2017, omitting 2020, based on my age. I haven't researched what happens to the Inherited IRA if I die while it still has a balance! I think if it goes to my kids they have a 10 year timeline, is it the same for my surviving spouse? I know it's treated differently than if it was my own IRA.

Tax wise, as MFJs we are solidly within the 12% bracket. As a single each of us would still be in the 12% bracket after the standard deduction. All that can change, of course!
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Old 08-23-2021, 11:11 AM   #82
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Yes, I regularly kill myself off several years before my DW in retirement models.

Plus doing Roth conversions well before taking SS on my tIRA rolled over from my previous corporate 401k.
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Old 08-23-2021, 12:30 PM   #83
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Me too, I'd do better because my pension would not have a survivor reduction and everything she has is 403b/401k.
We're in the same situation. I will be keeping a term life policy in force for five more years so that my wife would be able to minimize draws on her retirement funds before 65.
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Thinking of Disinheriting first spouse to die TIRA
Old 08-28-2021, 08:24 AM   #84
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Thinking of Disinheriting first spouse to die TIRA

Because we both have large TIRAs we are doing annual Roth conversions each year. I am considering having the first to die disinherit the remaining spousal TIRA to minimize RMDs and taxes for the survivor. We both would still have plenty to live on without the spousal TIRA. Itís would also spread out the tax burden for the kids.

What do you all think of this idea?
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Old 08-28-2021, 11:21 AM   #85
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Originally Posted by cb2008 View Post
Because we both have large TIRAs we are doing annual Roth conversions each year. I am considering having the first to die disinherit the remaining spousal TIRA to minimize RMDs and taxes for the survivor. We both would still have plenty to live on without the spousal TIRA. Itís would also spread out the tax burden for the kids.

What do you all think of this idea?
This is a great strategy based on your situation.
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Old 08-28-2021, 11:29 AM   #86
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Quote:
Originally Posted by cb2008 View Post
Because we both have large TIRAs we are doing annual Roth conversions each year. I am considering having the first to die disinherit the remaining spousal TIRA to minimize RMDs and taxes for the survivor. We both would still have plenty to live on without the spousal TIRA. It’s would also spread out the tax burden for the kids.

What do you all think of this idea?
I am not understanding the benefit

Yes you don't get that extra income which increase your taxes, but you also get that extra income after taxes are paid so I would think you would still come out ahead. I thought conversions to get rid of RMDs was the way to go until I realized I wasn't putting the after tax portion of the RMD into savings

Medicare levels and costs are what may change things, but that's still a high number to cross that line
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Old 08-28-2021, 04:57 PM   #87
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Quote:
Originally Posted by cb2008 View Post
Because we both have large TIRAs we are doing annual Roth conversions each year. I am considering having the first to die disinherit the remaining spousal TIRA to minimize RMDs and taxes for the survivor. We both would still have plenty to live on without the spousal TIRA. It’s would also spread out the tax burden for the kids.

What do you all think of this idea?
Depends on your plan for LTC; how survivor would handle a prolonged bear market; children's income; desire to make charitable distributions; and security of income for remaining spouse, i.e. a federal pension is pretty secure.

Disclaiming a portion of; or all of, the TIRA can be reassessed following the death of the first spouse.
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Old 08-30-2021, 12:52 PM   #88
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Originally Posted by disneysteve View Post
I don't think I've seen this mentioned in the many posts about planning for retirement. Do you, and if so how, in any way project or adjust for the possibility of one spouse dying early? It's great to plug in that we're both going to live to 99 but that's pretty unlikely.


If my wife were to pre-decease me, I think I'd be just fine. I'm more concerned with me going first, which is also statistically more likely.



I'm curious to hear how you all factor that in.
Never did much figuring but thought about it and feel very blessed the good Lord gave us the ability to provide for DW if I go first. We do everything ourselves, which imo has saved hundreds of thousands over the years. I'm most concerned about DW getting things repaired, vehicles, home, etc as we had fleecing before, now we have hyper fleecing! We just broke ground on a new home so everything should be newish if I were to go first. I'd be fine financially if DW were to go first but not mentally. I bought a truck early spring, engine locked up and was denied warranty. New engine & install was $20k. Two months of fighting and I was finally fully reimbursed. While the engine was being replaced, that dealer ruined the rear window of the truck while grinding or welding near it. Now I have to replace the window. The dealer tech marred one of the high pressure fuel lines on the new engine. Instead of chancing more damage to my truck or other issues, I bought and replaced the line myself as I really need the truck now. 12 hr job and parts cost. Easily a $2k job. No way DW would fight like you have to with the way businesses fleece today! Too many of those $20k bills would eventually start hurting. Half our towns population are retirees. We constantly hear stories from friends, acquaintances paying for repairs then the job never being completed.
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