|
|
Don't forget the survivor plan
12-09-2019, 12:40 PM
|
#1
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Don't forget the survivor plan
So, I have my retirement model all set up in excel and did a bunch of what ifs. Basically, as long as I slid into SS @ age 70 with $1, pretty much anything I did would work. SS+COLA pension covers all my expenses with a little room to spare.
I took that info and started running retirement date scenarios. Turns out I can retire @ 55 (2021) if I VPW to zero dollars @ age 71. That sure gives me a lot of money to blow in 15 years. YES!!!!
But then I got to thinking about what happens if I die. My SS benefit is greatly reduced (she has no SS). My pension goes to 55%. And then there are taxes. Hmmm, let's plug all that in:
Sorry hon, it was a good ride. If she dies first, no problem. If I die first, YIKES!!!
I do have laddered term life policies out to age 78, but inflation eats them up pretty bad.
So, now to think about how to break this to my wife. Or what to do to fix that "you go broke, but I'm dead so what do I care" chart.
UPDATE:
Turns out I will need to work longer and save more to prevent survivor poverty. I did reduce her spending by 20% vs. both of us, but even that didn't get her to 100. That sucks. Glad I looked, because I was making big plans for retiring in a little over a year and spending like a madman.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
12-09-2019, 01:12 PM
|
#2
|
Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,534
|
Will your wife have spousal SS benefits?
My understanding is that if you die, she would qualify for 100% of your benefits?
__________________
Balance in everything.
|
|
|
12-09-2019, 01:13 PM
|
#3
|
Thinks s/he gets paid by the post
Join Date: Oct 2014
Posts: 1,537
|
"Sorry hon, you gotta get a Jay Oh Bee"
__________________
-Big Dawg-FI since 9/2010. Failed ER in 2015. 2/15/2023=DONE! "Blow that dough"-Robbie
" People say I'm lazy, dreaming my life away Well, they give me all kinds of advice designed to enlighten me When I tell them that I'm doing fine watching shadows on the wall "Don't you miss the big time, boy. You're no longer on the ball" -John Lennon-
|
|
|
12-09-2019, 01:17 PM
|
#4
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by HNL Bill
Will your wife have spousal SS benefits?
My understanding is that if you die, she would qualify for 100% of your benefits?
|
Survivor benefits are in the plan. She will lose her spousal benefits and switch to survivor benefits which is a reaction from $57k / year to $41k / year. My pension drops from $48k / year to $27k / year. So her benefits are reduced from $105k to $68k. If she can reduce her expenses by 35%, she should be set!
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
12-09-2019, 01:18 PM
|
#5
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Or "Hon, why don't you work another year so I can survive?"
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
12-09-2019, 01:26 PM
|
#6
|
Thinks s/he gets paid by the post
Join Date: Dec 2017
Posts: 2,534
|
Quote:
Originally Posted by corn18
Survivor benefits are in the plan. She will lose her spousal benefits and switch to survivor benefits which is a reaction from $57k / year to $41k / year. My pension drops from $48k / year to $27k / year. So her benefits are reduced from $105k to $68k. If she can reduce her expenses by 35%, she should be set!
|
Have you established a budget for her as the survivor?
The last of several budgets/phases in my budget spreadsheet calculated how much it would cost my spouse to maintain the same standard of living without me, from my age 100, to hers (she's younger); For her, the reduction in food and insurance costs meant a reduction from a $91K budget (for both) to a $72K budget.
__________________
Balance in everything.
|
|
|
12-09-2019, 02:28 PM
|
#7
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by HNL Bill
Have you established a budget for her as the survivor?
The last of several budgets/phases in my budget spreadsheet calculated how much it would cost my spouse to maintain the same standard of living without me, from my age 100, to hers (she's younger); For her, the reduction in food and insurance costs meant a reduction from a $91K budget (for both) to a $72K budget.
|
I haven't. To be honest, I'm not sure what I would cut. Health insurance is free for us (military retiree). I can cut food, car ins, maybe a bit more elsewhere. There isn't $37k to cut.
But that's ok. 55 was a dream. But we save about $200k-$250k / year, so working 2 more years to 57 puts us in a very fat fire position. And she won't have any money worries when I die. So back to the original plan.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
12-09-2019, 02:33 PM
|
#8
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
|
Quote:
Originally Posted by corn18
Survivor benefits are in the plan. She will lose her spousal benefits and switch to survivor benefits which is a reaction from $57k / year to $41k / year. My pension drops from $48k / year to $27k / year. So her benefits are reduced from $105k to $68k. If she can reduce her expenses by 35%, she should be set!
|
So you're gravely concerned that your DW can't survive on $68k a year plus whatever other income/resources that you have? IIRC that is more than the average household income.
I would think a single person should be able to live pretty well on $68k a year, especially if they have a paid off home or other financial resources.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
12-09-2019, 02:36 PM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2014
Posts: 7,002
|
Pb, I was thinking the very same thing.
|
|
|
12-09-2019, 02:43 PM
|
#10
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by pb4uski
So you're gravely concerned that your DW can't survive on $68k a year plus whatever other income/resources that you have? IIRC that is more than the average household income.
I would think a single person should be able to live pretty well on $68k a year, especially if they have a paid off home or other financial resources.
|
Quote:
Originally Posted by Teacher Terry
Pb, I was thinking the very same thing.
|
Well, that's not our plan. We have a base budget of $110k and will decide each year how much above that we want to spend on travel and blow that dough. Right now, that is $25k until age 70 and $12.5k from 70-80. That is the lifestyle we have chosen. If someone wants to live on an average income, that's fine, but that's not our goal.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
12-09-2019, 03:01 PM
|
#11
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2014
Posts: 7,002
|
What I wonder would she be doing a lot of traveling without you? Except for cruises I wouldn’t want to travel alone.
|
|
|
12-09-2019, 03:07 PM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,202
|
Or, "Pack your bags, hon, I'm retiring!"
Wife: "Oh, fantastic, where are we going?"
You: "I don't care, just pack your bags and go!"
Anyway, better to discover this now than once retired.
|
|
|
12-09-2019, 03:11 PM
|
#13
|
Thinks s/he gets paid by the post
Join Date: Jun 2002
Posts: 1,635
|
Although I'm older than you I've been through the same thought process. I took military SBP at a lower level than you (35%) and took SS at 62. (I would do things differently if I could redo them but can't walk that dog back).
One thing that fits into my planning is an annuity. I bought a low-fee VA years ago and it did very well over the years. A year ago I did a 1035 exchange to a Navy Mutual Aid Association annuity that can't lose nominal value and should keep up with inflation. Although it's in my name I don't plan to annuitize it in my lifetime as I don't need the income. If I die first she, as the beneficiary, will become the owner and can annuitize it for another income stream.
Also, don't forget that someday RMDs will kick in. That's another income stream and I assume she is beneficiary for anything you've socked away in your civilian plan. Plus, whatever your taxable savings/investments throw off.
I will PM you about one other thought.
__________________
friar1610
|
|
|
12-09-2019, 04:31 PM
|
#14
|
Full time employment: Posting here.
Join Date: Apr 2016
Location: warren
Posts: 935
|
Quote:
Originally Posted by Teacher Terry
Pb, I was thinking the very same thing.
|
Me too, heck that's pretty much what I'm planning on for two of us.
|
|
|
12-09-2019, 05:14 PM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Dec 2015
Posts: 2,232
|
Quote:
Originally Posted by corn18
I haven't. To be honest, I'm not sure what I would cut. Health insurance is free for us (military retiree). I can cut food, car ins, maybe a bit more elsewhere. There isn't $37k to cut.
But that's ok. 55 was a dream. But we save about $200k-$250k / year, so working 2 more years to 57 puts us in a very fat fire position. And she won't have any money worries when I die. So back to the original plan.
|
Good on you. You'll survive working a couple more years. Well, if you don't, it won't be the work that killed you, and your decision is well justified. When you DO retire, it will be a nice feeling when you lay your head on your pillow at night that you took care of this.
|
|
|
12-09-2019, 06:59 PM
|
#16
|
Administrator
Join Date: Apr 2006
Posts: 22,973
|
Quote:
Originally Posted by corn18
I haven't. To be honest, I'm not sure what I would cut. Health insurance is free for us (military retiree). I can cut food, car ins, maybe a bit more elsewhere. There isn't $37k to cut.
But that's ok. 55 was a dream. But we save about $200k-$250k / year, so working 2 more years to 57 puts us in a very fat fire position. And she won't have any money worries when I die. So back to the original plan.
|
Good call. One of the promises I made to the young wife almost 36 years ago is that I would always take care of her. That includes after my death. So I have arranged things accordingly.
__________________
Living an analog life in the Digital Age.
|
|
|
12-09-2019, 09:51 PM
|
#17
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Well, I spent the night modeling my retirement cash flow by year. Turns out taxes are a wash whether I am dead or alive. While she can't convert as much 401k early on, her income is reduced a lot so there is no SS + RMD tax torpedo. That was interesting.
I also took out the spending for a second car. Forgot about that one. That makes a big difference ($6k / year). I did reduce her base spend by 10%. That works out great if I retire @ 56, so that is good news.
I found it interesting that the worst time for me to die is between age 67 and 70. All but one term life policies are gone and she is 4 years younger than I am, so that is a valley for her benefits. If I live to 71, she will get full SS survivor benefits. Now I jinxed myself.
And I'll say it once again: inflation kills life insurance. My $500k term policy that expires @ age 78 is only worth $246k in today's dollars (assuming 3% inflation / year).
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
12-10-2019, 07:49 AM
|
#18
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
|
Quote:
Originally Posted by corn18
Well, that's not our plan. We have a base budget of $110k and will decide each year how much above that we want to spend on travel and blow that dough. Right now, that is $25k until age 70 and $12.5k from 70-80. That is the lifestyle we have chosen. If someone wants to live on an average income, that's fine, but that's not our goal.
|
Fine, then keep working.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
12-10-2019, 07:50 AM
|
#19
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
|
Quote:
Originally Posted by corn18
.... I found it interesting that the worst time for me to die is between age 67 and 70. All but one term life policies are gone and she is 4 years younger than I am, so that is a valley for her benefits. If I live to 71, she will get full SS survivor benefits. Now I jinxed myself.
And I'll say it once again: inflation kills life insurance. My $500k term policy that expires @ age 78 is only worth $246k in today's dollars (assuming 3% inflation / year).
|
Buy more life insurance.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
12-10-2019, 08:21 AM
|
#20
|
Thinks s/he gets paid by the post
Join Date: Aug 2015
Posts: 1,890
|
Quote:
Originally Posted by pb4uski
Fine, then keep working.
|
Quote:
Originally Posted by pb4uski
Buy more life insurance.
|
Now that I can model the finances in the event of my death, it's not nearly as bad as my first look. I talked to my wife about it and we can still retire @ 55 even if I die at 67. Just requires more careful planning than if I die today.
__________________
Consistently sets low goals and fails to achieve them.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|