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Do you model loss of one spouse?
Old 08-21-2021, 05:56 PM   #1
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Do you model loss of one spouse?

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.
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Old 08-21-2021, 06:01 PM   #2
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You haven't been looking very hard if
you don't see this talked about.
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Old 08-21-2021, 06:06 PM   #3
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Originally Posted by ivinsfan View Post
You haven't been looking very hard if
you don't see this talked about.
I'm sure. Sorry if it's been asked before. If anyone can post links to threads where it's been discussed that would be great. I'll search around on my own.
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Old 08-21-2021, 06:34 PM   #4
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I am new to this forum and haven't seen any thread since I joined. I will share with you my own model as I run everything off an Excel spreadsheet to project income and expenses. Nothing to "plug in" as my spreadsheet is for our situation.

It is always about income >= expenses.
A) Current model is for 2 people:
- Hushand's SS + Wife's SS + Wife's Annuities + Husband's RMD. RMD constitutes less than 2% of total investments. This income is sufficient to meet expenses into the forseeable future. Both husband and wife have LTCI.

B) Husband passes away first
- Husband's SS (survivor benefits) + Wife's Annuities + 1% of total investments (before 72 yo taxable account, after 72 yo from RMD and leftover will be reinvested). Expenses will be reduced by Husband's medical insurance, half of food and groceries. Full amount of current household expenses (utilities, property tax, HOA, insurance etc). Country Club membership is likely to be dropped to sports and social member level and switched to playing public golf courses if so desired. $20K travel expenses will be reduced to $5K and all timeshare will be sold.

C) Wife passes away first.
- Husband's SS + Wife's Annuities + Husband's RMD
- Expenses will be reduced by Wife's medical insurance, food and groceries to drop by 30% (Husband drinks and wife does not) and timeshare will be sold reducing much of the travel expenses. Husband will continue with Country Club membership. Full amount of household expenses.

Hope this helps.
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Old 08-21-2021, 06:40 PM   #5
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Thanks, RetiredHappy.


"timeshare will be sold" - I'm going to assume the timeshare is DVC. If not, planning to sell it might be a pipe dream.
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Old 08-21-2021, 06:50 PM   #6
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Lots of folks mention death of a spouse when talking about the effects of RMDs and the higher tax bracket the longer living spouse will be in when one becomes single as a result of death. This motivates many to do Roth conversions.
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Old 08-21-2021, 06:51 PM   #7
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Thanks, RetiredHappy.


"timeshare will be sold" - I'm going to assume the timeshare is DVC. If not, planning to sell it might be a pipe dream.
We have mostly Marriott which have resale value. Marriott does sell them for us. In fact, they have sent me the agreement several times when I enquired but we decided that it is not yet time to divest.
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Old 08-21-2021, 06:52 PM   #8
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I can't say that I have modeled an early demise specifically, but I do believe I have accounted for it. The FIRECalc runs I did immediately prior to retirement (at ages 60/58) all had a 30 year period - so, to age 90/88 (I am older). All of them showed 100% success rate, even if we doubled our actual spending, and all showed an 8 figure portfolio at the end of the plan. To add a belt to our suspenders, we both took the 100% survivor benefit on our pensions. Additionally, while the GPO will deny her a social security survivor benefit after I die, I have a paid up whole life policy that will more than make up for the lost social security income if she annuitizes the death benefit. So, no matter who dies first, the survivor will continue to have the same income, and the portfolio will be large.

I am mostly concerned with fulfilling a promise I made over 37 years ago to take care of her. And I think I have planned to do that as well as is possible.
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Old 08-21-2021, 06:54 PM   #9
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We have mostly Marriott which have resale value. Marriott does sell them for us. In fact, they have sent me the agreement several times when I enquired but we decided that it is not yet time to divest.
Good to hear. I knew DVC was pretty easy to resell. I didn't realize Marriott was too.
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Old 08-21-2021, 06:54 PM   #10
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Lots of folks mention death of a spouse when talking about the effects of RMDs and the higher tax bracket the longer living spouse will be in when one becomes single as a result of death. This motivates many to do Roth conversions.
Great point. Thanks.
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Old 08-21-2021, 06:59 PM   #11
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It is the basis for doing Roths in our case, and delaying my SS till 70. As a couple the RMDs in DW's accounts would not be so tax-odious, but as a single filer they would.
Same goes for the delay of SS, which is only 85% taxable. Any way you can get a bigger deposit with a 15% taxable discount is good for a single filer.
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Old 08-21-2021, 07:35 PM   #12
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I think you will see it show up consistently in when should I take SS threads.


And tax issues.


It's embedded in a lot of threads so perhaps not quite as easy to single out. Every couple will be a little different so there is no cookie cutter answer. Just keep reading after you go part time.
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Old 08-21-2021, 07:39 PM   #13
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I use Fidelity’s Retirement Analysis. DW and I are the same age. In my model “End of Plan” is 93 for me and 95 for DW. Anything younger for either of us and warnings about longevity start popping up.
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Old 08-21-2021, 08:20 PM   #14
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To start with, we put just our individual numbers in fire calc. to see how just that would look, if we turned our backs and walked away from each other. From there we input all the different scenarios we could think of... including the cash out from the others pension should early demise occur, 100% and 50% survivor benefits, SS at different ages.
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Old 08-21-2021, 08:29 PM   #15
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Yes. We started killing off DH in modeling a few yrs before he retired. I would have a big cut in income if he went but he would be better off if I went bc im the one with a the good spendy ideas
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Old 08-21-2021, 09:03 PM   #16
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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.
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Old 08-21-2021, 09:30 PM   #17
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Quote:
Originally Posted by Gumby View Post
I am mostly concerned with fulfilling a promise I made over 37 years ago to take care of her. And I think I have planned to do that as well as is possible.
Is it a little dusty in here? My eyes seem to be watering.

She's a lucky woman.
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Old 08-21-2021, 09:46 PM   #18
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@disneysteve Yes. If you have a spreadsheet-based comprehensive financial model, you can easily adjust income and expenses by year, simulating various ages of demise.
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Old 08-22-2021, 01:31 AM   #19
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I have accounted for it in the past, well before we retired, which is why I added a life insurance policy on my death (no longer needed) as DW will lose half my company pensions, all of my UK SS plus a portion of our combined US SS. Her SS gets bumped up to what mine is which is why I’m delaying until age 70.

11 years into ER and we are “golden” financially regardless of who dies first.
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Old 08-22-2021, 05:41 AM   #20
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We have not modeled such a situation, primarily because our WR is so low, I don't see how either of us would have financial difficulties.
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